The relationship between economic value added and the stock market performance of agribusiness firms

Calum Turvey, Linda Lake, Erna van Duren and David Sparling
Additional contact information
Linda Lake: Fiscal Planning Branch, Ontario Ministry of Finance, 4th Floor, Frost Building South, 7 Queen's Park Crescent, Toronto, Ontario, Canada M7A 1Y7, Postal: Fiscal Planning Branch, Ontario Ministry of Finance, 4th Floor, Frost Building South, 7 Queen's Park Crescent, Toronto, Ontario, Canada M7A 1Y7
Erna van Duren: Department of Agricultural Economics and Business, University of Guelph, Guelph, Ontario, Canada N1G 2W1, Postal: Department of Agricultural Economics and Business, University of Guelph, Guelph, Ontario, Canada N1G 2W1

Agribusiness, 2000, vol. 16, issue 4, 399-416

Abstract: This article examines the relationship between economic value added (EVA) and the stock market performance of 17 publicly traded companies in the Canadian food processing sector. The research is motivated by the increased popularity of EVA in corporate finance and by the claims that high EVA causes incremental gains in share price values. Using1996 annual reports to compute EVA, and daily stock prices for 1994 through 1998, we attempt to correlate EVA with a variety of measures including accounting return on assets (ROA), return on equity (ROE), share price, the Capital Asset Pricing Model (CAPM) returns and risk, and others. Results find little support for the conjecture that high-EVA firms lead to higher shareholder value, however, because the management logic that has popularized EVA is so logical and fundamental to common practices in corporate finance that we resist dismissing EVA as a valued paradigm. Rather, we suggest that market volatility and other factors mask the short-run increments to shareholder wealth from EVA-implemented strategies. [EconLit citations: G30, Q13.] © 2000 John Wiley & Sons, Inc.

Date: 2000
References: View complete reference list from CitEc
Citations: View citations in EconPapers (11)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:wly:agribz:v:16:y:2000:i:4:p:399-416

DOI: 10.1002/1520-6297(200023)16:4<399::AID-AGR2>3.0.CO;2-9

Access Statistics for this article

Agribusiness is currently edited by Ronald W. Cotterill

More articles in Agribusiness from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().