Trading Strategy on EVA and MVA: Are They Reliable Indicators of Future Stock Performance?
7 Pages Posted: 27 Feb 2016
Date Written: February 27, 2016
The usefulness of economic value added (EVA) in forecasting stock performance has been widely debated, and there is much disagreement. This paper examines empirically whether a high adjusted EVA, both scaled by market capitalization, can produce excess stock returns. We find that the risk-adjusted return of the high EVA stocks is greater than of the low EVA stocks, but not statistically significant.
Keywords: economic value added, EVA, stock performance, portfolio performance
JEL Classification: G10, G11, G12, G14
Suggested Citation: Suggested Citation