Asymmetric impact of economic value-added dynamics on market value of stocks in Pakistan stock exchange, a new evidence from panel co-integration, FMOLS and DOLS

• Main Authors: Adil Pasha, Muhammad Ramzan
• Format: Article
• Language: English
• Published: Taylor & Francis Group 2019-01-01
• Series: Cogent Business & Management
• Subjects: eva; roa; stock returns; fmols; dols
• Online Access: http://dx.doi.org/10.1080/23311975.2019.1653544

Shareholders' wealth maximization is the ultimate objective of firms. Economic value added (EVA) is a financial metric linked to shareholders' wealth maximization. Prior studies revealing the efficacy of value-based and accounting-based performance measures are inconclusive. Moreover, all prior research ignored long-run and short-run co-integration of traditional as well as value-based financial performance measures with share prices. This research found EVA has a negative weak but significant relation with stock return in long run by employing panel co-integration, panel FMOLS and panel DOLS for 70 nonfinancial Pakistan Stock Exchange listed firms from 13 industries for a study period of 2006–2015.