EVALUATION OF COMPANY PERFORMANCE WITH ACCOUNTING AND ECONOMIC CRITERIA: InformationKim examined the relative and incremental information content of EVA and traditional performance measures( earning and cash flow) with hospitality firm value. Relative information content test show earning is more beneficial than cash flow in explanation the market value of hospitality firms. EVA has very small descriptive itself. The incremental information content test indicates that EVA compares to earnings and cash flow, makes only a marginal contribution to information content. Generally, the results do not uphold the suggestion that EVA is better than earning and cash flow in relationship to the market value of equity. Yaghoob nejad & Akaf studied the relationship between EVA, residual income (RI), return on sales (ROS), return on investment (ROI), and market value added (MVA) in Tehran stock exchange (TSE). Their result revealed there is meaningful relationship between EVA, RI, ROS, and ROI with MVA. In the total firms, the strongest relationships were ROS, EVA, ROI, and RI with MVA respectively. In chemical industries this relation was ROS, EVA, RI, and ROL with MVA respectively.
Kyriazis and Anastassis in a research examined the relative explanatory power of economic value added (EVA) with share returns and market value of company, compared to recognized variables of accounting; net income (NI) and operating income (OI), in the context of a small European developing market, namely the Athens Stock Exchange (ASE). The results do not support the claim of Stern Stewart that EVA is more associated with stock return and market value. Relative information content tests show that net income (NI) and operating income (OI) have more correlated with stock return and market value than EVA. Moreover, the results reveal that EVA does not outperform relationship significantly to the firm’s market value added compared to net income (NI) and operating income (OI).
Ismail, Fazilah, Hwa, Abdulbasah, and Azli Ayub, examined economic value added (EVA) as a performance measurement for government- linked companies(GLCs) versus NON- GLCs in Bursa Malaysia. The results of this study revealed that firms with government as the stakeholders was unsuccessful to associate and had negative connection with EVA. Firms that had a negative EVA point up these companies had a high level of cost of capital therefore, the government must keep away from investing in such firms. Ismail (2011b) using the economic value added (EVA) as a predictor for predicting company performance after 1997 economic crisis. His results show that EVA had a better relationship with stock return than traditional tools ( EPS, DPS, NOPAT) for the period of 1997-2002, for the main board company listed on Bursa Malaysia. Ismail (2011a) studied the ability of economic value added (EVA) characteristics in predicting company performance in Bursa Malaysia. His result shown the value creators had a better relationship with earning than value destroyers. More than, his study exhibited that value creators have better earnings multiplier than value destroyers. His study also showed that, EVA had a better association with return of stock over the study period.
Ghadiri Moghaddam and Shoghi investigated the association between refined economic value added (REVA) and market value added (MVA) with earnings per shares (EPS) in Tehran Stock Exchange (TSE). Their samples involves 97 companies accepted in TSE during five years over 2004 – 2008. The results show market value added (MVA) has more correlation with earnings per share (EPS) than the refined economic value added (REVA). The results reveal that the correlation coefficient among market value added (MVA) and earnings per shares (EPS) is 0.473, and the correlation coefficient between refined economic values added (REVA) and EPS is 0.158. These results show the correlation coefficient between REVA and EPS is much weaker than correlation among MVA and EPS.