Abstract
The main interest in this paper is to test whether earnings management and governance mechanisms may help bridge the gap between accounting values, approximated by economic value added (EVA) and market values, approximated by created shareholder value (CSV). First, the results clearly show a non-significant relationship between EVA and CSV. Secondly, a positive correlation is identified between the difference (CSV-EVA) and discretionary accruals, proxy of earnings management. Thirdly, it is found that some governance mechanisms can attenuate the gap between CSV and EVA, whereas others can accentuate it. Finally, the results reveal that the different cases of convergence and divergence between CSV and EVA can be explained by governance mechanisms and earnings management.
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