| Summary: | 碩士 === 國立交通大學 === 科技管理研究所 === 86 === Economic Value Added (EVA), developed by Stern Stewart & Co., is a
financial tool that enables companies to do more with less by spotlighting the
cost of capital. EVA-related metrics are increasingly being used not only in
internal decision making, but as a way to evaluate company performance.
It is even claimed by many in the U.S. that EVA is the best indicator of
business performance. One of EVA''''s most powerful properties is its strong link
to stock price. However, it is not clear if EVA will still be
an effective measure
of firms performance when used in countries other than the U.S.
In this study, I examined the validity of EVA in the premise of Taiwan''''s
stock market. Specifically, two hypotheses regarding the explanatory power of
EVA are examined by cross-sectional models, industry-specific models, and
different groups of systematic risk models.
The primary finding of this study is that the association of EVA with stock
return is not as strong as suggested in anecdotal EVA stories.
EVA is neither as
perfect as claimed by its advocates, nor is it the only
performance measure that
suggests a path to a superior stock return.
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