DOI: 10.5176/2251-1997_AF16.23
Authors: Habibollah Nakhaei and Gholamreza Nakhaei
Abstract:
Economic value added momentum (EVAM) is a newest value based measure that introduced by Stewart in 2009. The main goal of the paper is to investigate the relationship between economic value added (EVA) and EVA Momentum (EVAM) as proxy of value based measures with stock return (SR) compared to net income (NI) and net operational profit after tax (NOPAT) as proxy of accounting criteria. Very few studies in Malaysia attempted to focus on the importance of value based measurement tools like EVA and EVAM and their relationship. The sample involves 395 non-financial companies listed in the main market of Bursa Malaysia over the period 2002– 2011. Pearson correlation coefficient and panel data multiple regression models were employed to analysis the historical data. Empirical results showed there are significant associations between NI, NOPAT, and EVA with stock return. The associations between NI and NOPAT with stock return were positive but the association between EVA and stock return was negative. Moreover, the results exhibit there is not relationship between EVAM and stock return. In summary, the results do not support the superiority of value based measures on accounting measures and Stewart claims that “EVA Momentum; the one ratio that tells the whole story”.
Keywords: Economic value added, EVA Momentum, net income, net operational profit after tax, and stock return.
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