Verifying of Information Content of Economic Value Added EVA in the Food-processing Sector of the Czech Republic

Ověření vypovídací schopnosti ukazatele ekonomická přidaná hodnota EVA v odvětví potravinářského průmyslu ČR

Gabriela Chmelíková

Acta Oeconomica Pragensia, 2008, vol. 2008, issue 5, 32-46

Abstract: This paper is devoted to today's very popular performance measure - Economic Value Added (EVA). The aim of this article is to investigate the relationship between Economic Value Added, traditional performance measures (ROA and ROE) and ability of creation of shareholder wealth for food-processing firms in the Czech Republic. The intent of this article is fulfilled by providing a simple regression tests of the hypothesis, that between EVA and traditional performance metrics there is not a tight linear dependency which would point out that EVA has the same information content as traditional performance measures and hypothesis, that the EVA measure is more associated with improved shareholder wealth than traditional performance measures. The results of regression analysis indicate in all cases a positive correspondence between EVA and financial performance metrics with very low dependency of EVA on the financial metrics and show higher quality information content of EVA indicator in the relationship to the ability of shareholder wealth creation than traditional performance measures. This fact supports the tested hypothesis as well as the conclusions of corporate finance theory, that from the theoretical point of view EVA is seen as a superior performance metric.

Keywords: Economic Value Added; Traditional Performance Metrics; Information Content; Food-processing sector (search for similar items in EconPapers)
JEL-codes: G M Q (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://aop.vse.cz/doi/10.18267/j.aop.160.html (text/html)
http://aop.vse.cz/doi/10.18267/j.aop.160.pdf (application/pdf)
free of charge

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:prg:jnlaop:v:2008:y:2008:i:5:id:160:p:32-46

Ordering information: This journal article can be ordered from
Redakce Acta Oeconomica Pragensia, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3
http://aop.vse.cz

DOI: 10.18267/j.aop.160

Access Statistics for this article

Acta Oeconomica Pragensia is currently edited by Klára Šimůnková

More articles in Acta Oeconomica Pragensia from Prague University of Economics and Business Contact information at EDIRC.
Bibliographic data for series maintained by Stanislav Vojir ().