Usefulness of Economic Value Added and Value Added Information
Asian Tax Journal Vol. 5 No. 2 (2004), pp. 57-77
Abstract
This study examines the relationship between accounting income, EVA and value added information. And we also examine incremental information contents of EVA and value added information compared to accounting information. An empirical analysis is performed for non－banking firms listed on the Korean Stock Exchange over 2001－2003. We find that high positive correlation between unexpected accounting incomes and unexpected EVA. And we find that positive correlation between cumulative abnormal returns and unexpected accounting incomes, unexpected value added, unexpected EVA. We also test incremental information contents of EVA and value added information using the multiple regression model. And we find that value added information have incremental informational contents. But we can't find any incremental information contents of EVA compared to accounting information. These results imply that the users of financial reporting are not only stockowners but also many other resources providers including creditors, employee and country. And these results also imply that we must consider the expansion of disclosure of value added information.
Keywords
- value added information
- economic value added
- EVA
- accounting income
- performance measures
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