Trading Strategy on EVA and MVA: Are They Reliable Indicators of Future Stock Performance?

7 Pages Posted: 27 Feb 2016

See all articles by Robert Ferguson

Robert Ferguson

AnswersToGo

Joel Rentzler

City University of New York (CUNY) - Baruch College

Susana Yu

Iona College

Date Written: February 27, 2016

Abstract

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

Ferguson, Robert and Rentzler, Joel and Yu, Susana, Trading Strategy on EVA and MVA: Are They Reliable Indicators of Future Stock Performance? (February 27, 2016). Journal of Investing, Vol. 3, No. 4, 2006. Available at SSRN: https://ssrn.com/abstract=2739098

Robert Ferguson (Contact Author)

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Joel Rentzler

City University of New York (CUNY) - Baruch College ( email )

17 Lexington Avenue
New York, NY 10010
United States

Susana Yu

Iona College ( email )

715 North Avenue
New Rochelle, NY 10801
United States

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