Empirical Analysis on Impact of Economic Value Added on Shareholder’s Value: A Perspective from Malaysian Construction Companies
Year: 2015
Type: article
Abstract: Background: Economic value added (EVA) is a concept developed Stern Stewart \nhelps to identify true profitability of the organization due to consideration of cost of \nequity. Construction companies have been taken under consideration for this study. \nObjective: To provide an alternative measurement tool for the Malaysian construction \ncompanies that identifies true economic profit and enhance shareholder‟s value. Cross \nsectional secondary data are used of the selected companies for the period of 10 years \nfrom 2003 to 2012 Results: The result found significant influence of EVA on \nshareholder‟s value creation. It was also noticed from the trend analysis that from the \n28 companies only 10 companies were having positive EVA whereas the remaining has \ndestroying the shareholder value. The reason for negative EVA is high cost of equity. \nConclusion: Thus in the proposed model it is confirmed that EVA as a value based \nperformance tool dominates the shareholder value. Hence managers are suggested to \npay more focus on the importance of EVA and its benefits for the shareholder‟s wealth \ncreation and improve company performance.
Institution: Universiti Malaysia Pahang Al-Sultan Abdullah
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2293967965