Abstract
This study aims to determine the effect of EVA and ROI and which is better able to explain the change in Stock market’s value in the companies listed in (ASE) (2006-2015), the researcher addresses a random sample consisting of (46) Company, and uses regression model, which connects the dependent and independent variables.The results of the study shows that the return on investment (ROI) is better than (EVA) to interpret the changes in Stock market’s value, where the coefficient of determination (R2) for the ROI is (22.5%), while the R2 for EVA Only 1.3%.This study also recommends the need to look for additional factors that would explain the changes in stock market's value such as: the degree of leverage, systemic risks, and macroeconomic indicators such as: (interest rates and inflation).
Highlights
With the growing role of financial management and increasing the corporate awareness of the objectives that to be achieved, and in the light of which the success of the management is evaluated, the shift of financial thought that focuses on maximizing the market’s value of the owners' wealth has become one of the most important strategic objectives that financial management seeks to achieve and maintain
The economic value added was defined by Stern Stewart as a measure of financial achievement to estimate real profit, which is related to the shareholder's wealth over time, which is the difference between net operating profit after tax and Weighted Average Cost of Capital WACC. (Jiambalov, 2007)
Bin Marid (2014) examined the extent to which the economic value added index contributed to the evaluation of the financial performance of the private sector institutions compared to the traditional performance indicators ROE, ROA, and ROS and applied to NCD Rouiba
Summary
With the growing role of financial management and increasing the corporate awareness of the objectives that to be achieved, and in the light of which the success of the management is evaluated, the shift of financial thought that focuses on maximizing the market’s value of the owners' wealth has become one of the most important strategic objectives that financial management seeks to achieve and maintain. Recent financial performance’s measurements, such as: economic value added that is used to determine the extent to which the strategic goals of the company are achieved. The objective of this study is to test the ability of these measures to explain the changes in the market’s value of the shares of the companies that are listed on the ASE during the period 2006-2015, in view of the importance of these companies in contributing to the achievement of Jordanian economic advancement. The theoretical debate remains to prove which measures are better able to interpret the changes in the market’s value of firms, are the traditional measures, such as: ROI or the recent measures such as: EVA
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