Information contribution of economic value added of listed Hong Kong firms

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Information contribution of economic value added of listed Hong Kong firms

 

Author: Chan, Pik-kwan Elisa
Title: Information contribution of economic value added of listed Hong Kong firms
Degree: M.Sc.
Year: 2001
Subject: Corporations -- China -- Hong Kong
Economic value added -- China -- Hong Kong
Hong Kong Polytechnic University -- Dissertations
Department: Multi-disciplinary Studies
Dept. of Accountancy
Pages: v, 72 leaves : ill. ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1555497
URI: http://theses.lib.polyu.edu.hk/handle/200/4323
Abstract: Over the years, investors have been seeking a single measure of corporate performance that enables them to identify investment opportunities and to help corporate managers to implement value-added business strategies. Economic Value Added (EVA) has been claimed to be such a measure by Stem Stewart & Co. in the United States. On the other hand, the most commonly used accounting measures such as earnings per share and return on equity were criticized for being subject to earnings management and manipulation. This study therefore tests whether the above assertion is true using stock observations from listed firms in the Hong Kong market. In this study, relative information content tests show that earnings has a stronger association with firm values and stock returns than economic value added whilst incremental information content tests suggest that economic value added only adds marginal information contribution beyond that of earnings. In terms of the ability to predict future earnings and stock price, economic value added is inferior to earnings. Considered together, these results do not support the assertion that economic value added is a better performance measure than earnings to investors and corporate managers in Hong Kong.

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