oa Meditari : Research Journal of the School of Accounting Sciences - EVA versus traditional accounting measures of performance as drivers of shareholder value - a comparative analysis
|Article Title||EVA versus traditional accounting measures of performance as drivers of shareholder value - a comparative analysis|
|© Publisher:||University of Pretoria|
|Journal||Meditari : Research Journal of the School of Accounting Sciences|
|Author||J.H.v.H. De Wet|
|Publication Date||Jan 2005|
|Pages||1 - 16|
|Keyword(s)||Dividends per share (DPS), Earnings per share (EPS), Economic Value Added (EVA), Market value added (MVA), Return on assets (ROA) and Return on Equity (ROE)|
Several researchers and practitioners, notably Stern Stewart Consulting Company and Associates, have claimed that economic value added (EVA) is superior to traditional accounting measures in driving shareholder value. Other researchers have refuted these claims by supplying data in support of traditional accounting indicators such as earnings per share (EPS), dividends per share (DPS), return on assets (ROA) and return on equity (ROE). This study endeavoured to analyse the results of companies listed on the JSE Securities Exchange South Africa, using market value added (MVA) as a proxy for shareholder value. The findings do not support the purported superiority of EVA. The results suggest stronger relationships between MVA and cash flow from operations. The study also found very little correlation between MVA and EPS, or between MVA and DPS, concluding that the credibility of share valuations based on earnings or dividends must be questioned.
Article metrics loading...