 PERHAPS EVA DOES BEAT EARNINGS—REVISITING PREVIOUS EVIDENCEGlenn D. Feltham, Grant E. Issac, Chima Mbagwu and Ganesh Vaidyanathan Journal of Applied Corporate Finance, 2004, vol. 16, issue 1, 83-88 Abstract: In two articles, the first published in 1997 in the Journal of Accounting and Economics and the second in 1999 in this journal, Gary Biddle, Robert Bowen, and James Wallace presented evidence that reported earnings are more closely related than EVA to marketadjusted stock returns– in other words, that earnings are more “value relevant” than EVA. These papers, which are among the most widely cited in finance and accounting, fundamentally affected perceptions about the importance of EVA as a measure of corporate performance. The current article addresses a simple question: Do the Biddle, Bowen, and Wallace results continue to hold for a different set of companies, a different time period, and a different market? The authors first examined updated EVA information for different companies in the same time period examined in the Biddle, Bowen, and Wallace study. They then looked at a more recent time period (1995–1999) and a different market (the Canadian stock market), and found in all cases that “EVA has greater power than earnings in explaining marketadjusted stock returns.” Their findings validate the widespread corporate acceptance of EVA as a management tool. Date: 2004 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jacrfn:v:16:y:2004:i:1:p:83-88 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Applied Corporate Finance is currently edited by Donald H. Chew Jr. More articles in Journal of Applied Corporate Finance from Morgan Stanley |
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