Stewart first provided evidence of the correlation between EVA and Market Value Added (MVA). Lehn and Makhija analyzed the correlation degree between various performance measures and share market returns. The consequence point out that there are most highly associated between EVA and share return returns and that this correlation was slightly better than with traditional performance measures such as ROA, ROE and ROS.
Milunovich and Tseui found that MVA is more highly correlated with EVA than with EPS, EPS growth, ROE, FCF or FCF growth. Lefkowitz examined the US firms and result of the study shown EVA is better associated with share return than conventional performance criterions. He discovered that EVA is rationally dependable guide to know the value of the company.
Isa and Lo said EVA has gained significant attention as an alternative to the traditional accounting measures for assessing corporate performance due to its transparency and capacity to provide more vital information. It is hoped that the introduction of this tool will help investors in Malaysia make better investment and allocation of resource decisions. Zoolhelmi studied the relation between EVA and stock return. He had chosen 78 industrial product companies from main board of the Kuala Lumpur Stock Exchange (KLSE). He fined there is no added advantage in EVA compared to traditional methods as a performance measurement.
Fernandez using EVA, MVA, NOPAT, and WACC to analyze 582 firms’ information, gave by Stern Stewart. He had calculated the 10-year correlation among raise EVA, NOPAT, WACC each year and MVA each year. The association between raising the NOPAT each year and the MVA each year was greater than the association between EVA each year and MVA each year, for 296 (of 582) firms. For 210 firms the correlation between EVA and MVA was negative. The standard association between the rise in the MVA and NOPAT, EVA, and WACC was 21%, 16% and – 21.4% respectively. The mean-association between the rise in the MVA and the rise of NOPAT, EVA, and, WACC was 22,5%, 18%, and -4.1%. Firer studied about relative an incremental information content of value added and earning in South Africa. He used a capitalization market model and found that value added concept dominates earnings in terms of relative information content, while earnings dominate value added in terms of the incremental information content. However, the value added is statistically significant in respect of explaining and predicting company performance.
Wong Error! Reference source not found. study the Impact of Economic Value Added (EVA) and Traditional Performance Based Measures on Stock Returns: Evidence from Malaysia. She examines the association between EVA, ROA, ROE, and EPS with stock return in Bursa Malaysia (Kuala Lumpur Stock Exchange). Her sample involves the public companies accepted in main market of Bursa Malaysia for the year 1990 – 2000. The 2-step and 4-step hierarchical regression models with firm size, firm risk and sector controlled – revealed that ROA, ROE, and EPS have significant influence on stock returns. EVA was found to be the worst performer in predicting stock returns regardless of in which economic period it is investigated. As such, this study did not find a strong ground for the assertion by Stewart, let alone championing the claim of Stewart in abandoning earnings per share and ‘forget (about) ROA, ROE and ROI’. It proves that EVA is not as good as what Steward claimed.