Empirical Evidence on the Relationship Between EVA and Stock Returns in Brazilian Firms

Abstract:     
The paper reports empirical evidence on the relationship between Economic Value Added (EVA) and stock returns in Brazilian firms. This relationship has been subject to controversy in recent years, with some authors finding significant ties between those variables while others finding none. The hypothesis that EVA affects stock returns is tested through regression analysis using alternative models. The sample comprises companies traded in the main Brazilian stock exchange. A comparison of outcomes of previous studies with ours shows that significant results depend on finding the appropriate variables (stock prices versus stock returns) and the correct dynamics linking the dependent and the explanatory variable.

Number of Pages in PDF File: 9

Keywords: EVA, Economic Value Added, stock returns, Brazilian firms, empirical evidence

JEL Classification: C12, C22, M41

working papers series