Economic value added: The best indicator for measuring value creation or just an illusion?
Value creation has become a very important concept in finance. To this end, value creation metrics, like market value added and economic value added have raised the question of their superiority and ability to reflect the true value of organizations, as opposed to the classic accounting indicators l...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2023-02-01
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| Series: | Investment Management & Financial Innovations |
| Subjects: | |
| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/17706/IMFI_2023_01_Faiteh.pdf |
| _version_ | 1811164956807135232 |
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| author | Anouar Faiteh Mohammed Rachid Aasri |
| author_facet | Anouar Faiteh Mohammed Rachid Aasri |
| author_sort | Anouar Faiteh |
| collection | DOAJ |
| description | Value creation has become a very important concept in finance. To this end, value creation metrics, like market value added and economic value added have raised the question of their superiority and ability to reflect the true value of organizations, as opposed to the classic accounting indicators like ROE, ROA and EPS. Nevertheless, EVA can only be calculated for listed companies, which makes it difficult to use this indicator to measure value creation for non-listed companies. In this way, some alternatives have been used such as the accounting beta to calculate the return on equity and subsequently the determination of the EVA. Within this framework, the central point of this research is to empirically verify the idea that the normal EVA and EVA calculated using accounting beta are the better measure than traditional indicators to explain MVA. A panel of 32 companies traded on the Casablanca Stock Exchange over the period 2015–2019 was selected for this study. The regression method on panel data was used. The results show that normal EVA is a superior metric than the classical indicators to explain MVA. In addition, the EVA calculated from the accounting beta could be used as a measure adapted to the case of unlisted companies to measure value creation. |
| first_indexed | 2024-04-10T15:29:41Z |
| format | Article |
| id | doaj.art-f3ca19da1ec249aea7f1e9d418f5fffa |
| institution | Directory Open Access Journal |
| issn | 1810-4967 1812-9358 |
| language | English |
| last_indexed | 2024-04-10T15:29:41Z |
| publishDate | 2023-02-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj.art-f3ca19da1ec249aea7f1e9d418f5fffa2023-02-14T07:00:45ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582023-02-0120113815010.21511/imfi.20(1).2023.1317706Economic value added: The best indicator for measuring value creation or just an illusion?Anouar Faiteh0Mohammed Rachid Aasri1https://orcid.org/0000-0001-5807-4641Ph.D., Faculty of Law, Economic and Social Sciences – Souissi, Research Laboratory in Economic Competitiveness and Managerial Performance, Mohammed V UniversityProfessor, Faculty of Juridical, Economic and Social Sciences, Faculty of Law, Economic and Social Sciences – Souissi, Research Laboratory in Economic Competitiveness and Managerial Performance, Mohammed V UniversityValue creation has become a very important concept in finance. To this end, value creation metrics, like market value added and economic value added have raised the question of their superiority and ability to reflect the true value of organizations, as opposed to the classic accounting indicators like ROE, ROA and EPS. Nevertheless, EVA can only be calculated for listed companies, which makes it difficult to use this indicator to measure value creation for non-listed companies. In this way, some alternatives have been used such as the accounting beta to calculate the return on equity and subsequently the determination of the EVA. Within this framework, the central point of this research is to empirically verify the idea that the normal EVA and EVA calculated using accounting beta are the better measure than traditional indicators to explain MVA. A panel of 32 companies traded on the Casablanca Stock Exchange over the period 2015–2019 was selected for this study. The regression method on panel data was used. The results show that normal EVA is a superior metric than the classical indicators to explain MVA. In addition, the EVA calculated from the accounting beta could be used as a measure adapted to the case of unlisted companies to measure value creation.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/17706/IMFI_2023_01_Faiteh.pdfaccounting betaaccounting measurescost of equityEVAmarket value added |
| spellingShingle | Anouar Faiteh Mohammed Rachid Aasri Economic value added: The best indicator for measuring value creation or just an illusion? Investment Management & Financial Innovations accounting beta accounting measures cost of equity EVA market value added |
| title | Economic value added: The best indicator for measuring value creation or just an illusion? |
| title_full | Economic value added: The best indicator for measuring value creation or just an illusion? |
| title_fullStr | Economic value added: The best indicator for measuring value creation or just an illusion? |
| title_full_unstemmed | Economic value added: The best indicator for measuring value creation or just an illusion? |
| title_short | Economic value added: The best indicator for measuring value creation or just an illusion? |
| title_sort | economic value added the best indicator for measuring value creation or just an illusion |
| topic | accounting beta accounting measures cost of equity EVA market value added |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/17706/IMFI_2023_01_Faiteh.pdf |
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