Does Economic Value Added (EVA) Improve Stock Performance or Profitability
Year: 2005
Type: preprint
Abstract: This article uses event study methodology to investigate whether firms adopt Stern Stewart's EVA system due to poor stock performance (i.e., poor profitability) and whether adopting EVA leads to better stock performance (i.e., greater profitability). There is insufficient evidence to conclude that poor stock performance leads firms to adopt EVA or that adopting EVA improves stock performance. Firms that adopt EVA appear to have above average profitability relative to their peers both before and after the adoption of EVA; further, there is some evidence that EVA adopters experience increased profitability relative to their peers following adoption.
Source: SSRN Electronic Journal
Authors: Robert Ferguson, Joel Rentzler, Susana Yu
Institutions: Baruch College, City University of New York, Iona College
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1722653607