Dissertation > Economic > Economic planning and management > Enterprise economy > Corporate Financial Management

The EVA theory and applied research

Author LiuKuiYang
Tutor MaYongKai
School University of Electronic Science and Technology
Course Quantitative Economics
Keywords EVA MVA performance evaluation Stock Return.
CLC F275
Type Master's thesis
Year 2004
Downloads 622
Quotes 4
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On the basis of introducing EVA and MVA, recalling the theories and transition process on performance evaluation of the inside and the outside, this paper deduce the relations among EVA and residual income、 EVA and NPV、EVA and MVA, which exposes the financial base of EVA.It is first to compute EVA in the usage of EVA concisely. In order to calculate EVA, the creator of EVA produces the amendments as many as 164 items. Some papers that introduce EVA just give out the items to need to readjust but the reasons and principle of readjusting EVA have not been explained .This article presents the reasons、principles in the course of computing EVA and the computing methods according to balance sheet and benefit and loss statement.It is expected to testify whether EVA and MVA can explain much more on return than traditional accounting measures of performance in china stock market through analyzing relation between EVA、MVA and stock return empirically. Among empirical analysis, this paper chooses the data of all the stocks in market A from 1991to 2001 to calculate and analyze the relations among EVA 、 MVA、 earning per stock 、the mass of the companies and the ratio of earning-price etc. At last, six relevant indexes are chosen as variables and stock market return as variable to make linear regression as so as to compare them the power of explanation to stock market return.Empirical analysis indicates that EVA and MVA haven’t amassed more advantage on explaining the shock return than other conventional indexes. Though EVA and MVA have got good popularity in the abroad and enjoy perfection on theory, they are set on the serial basis such as the stock market maturity, better legal environment where the companies develop well and reasonable investors with good knowledge on security investment. To the contrary, conventional accounting indexes as EPS 、price /book value ratio earning/price ratio are more highly associated with returns and firms values than EVA and MAV。Traditional performance evaluating methods are still powerful investment and analysis tool,just because the capital market is not mature and EVA has not been popularly cognized and commended. This article also discusses its application in managerial practice. Through explore the pitch and relevant regulations on EVA, it test whether EVA can restrain the earning management and profit manipulation.

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