THE INFORMATION CONTENT OF ECONOMIC VALUE ADDED

While proponents of the measure economic value added (EVA) generally report high levels of correlation between the measure and shareholder value creation, other researchers have reported conflicting results. It is, therefore, not clear whether the measure is able to outperform more conventional accounting measures when attempting to account for the variation in share returns. In this paper the ability of the measure EVA to explain market adjusted share returns is investigated for a sample of American companies and compared to that of traditional and other value based financial performance measures.