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R2 = 7%) and EVA (Adj. R2 = 6%), and that all three dominate cash flows from operations, CFO (Adj. R2 = 3%).16 This finding is supported across a number of alternative specifications. These results do not support the claim that EVA

Gary C. Biddle, Robert M. Bowen and James S. Wallace, "Does EVA Beat Earnings? Evidence on Associations with Stock Returns and Firm Values," Journal of Accounting and Economics, Vol. 24, No. 3 (December 1997), 301-336. 14 For examples of such claims, see G. Bennett Stewart, The Quest For Value, Harper Business, New York (1991), pgs. 2, and 66; Harvard Business Review (November-December, 1995), p. 20; and G. Bennett Stewart, "Eva: Fact or Fantasy," Journal of Applied Corporate Finance Vol. 7, No. 2 (Summer 1994), p. 75. 15 See Biddle, Bowen and Wallace (1997), cited above, equation (6), Figure 3 and related text for elaboration on this regression and related statistical tests. 16 The strength of the relation between stock returns and contemporaneous performance is a function of the length of the time frame or ‘window’ over which returns and performance are measured. For example, Adj. R2 for regressions over 5-year windows were NI (31%), CFO (19%), EVA (14%) and RI (11%). Again, we find no evidence of EVA or RI ‘beating’ earnings over five-year intervals.

dominates earnings in its association with stock returns. On the contrary, NI appears to outperform EVA on average. [Insert Figure 3 about here] A second and related question that we examine is whether EVA and/or RI complement currently mandated performance measures by conveying information beyond that contained in contemporaneous NI and CFO: Q2: Do components unique to EVA and/or RI help explain contemporaneous stock returns beyond that explained by CFO and NI? To address this question, we decompose EVA into its component parts as shown in Figure 1 (e.g., cash from operations, operating accruals, capital charge, and net accounting ‘adjustments’) and evaluate the contribution of each component toward explaining contemporaneous stock returns. We find that EVA components add little to the explanatory power of the regressions. Further, tests across alternative specifications indicate that, while traditional earnings components such as operating cash flow and accruals are consistently significant, components unique to EVA—that is, the capital charge and accounting adjustments – are often not significant in explaining contemporaneous returns. These results suggest that EVA components contribute only marginally to the information already available to market participants in net income. Figure 4 summarizes our overall findings on the value-relevance of EVA versus the other performance measures. It combines comparisons of relative information content comparisons (Adj. R2s) from question 1 (which are shown as circle sizes in the figure), and comparisons of incremental information content comparisons (F-statistics) from question 2, shown as relative positioning or lack of overlap (with less overlap indicating more incremental。

Information content). Overall, neither EVA nor RI appears to dominate NI in its association with stock market returns. NI has the largest relative information content (as indicated by the largest circle) and the overlap between circles is large suggesting that there is little incremental information content in EVA, RI and CFO beyond that contained in NI本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。