Market Value Added Research Articles

A system dynamics approach to analyse the impact of energy efficiency policy on ESCO ventures in European Union countries: a case study of Portugal

The development of a competitive and sustainable market for energy performance contracting (EPC) projects supplied by energy service companies (ESCO) may contribute to realising the existent potential of energy savings. Nevertheless, in different countries, like Portugal, this market is still immature and remains far below its promised potential. Different from the existent research that assumes factors operate independently and focusses on how to remove barriers to the adoption of EPC, this study provides insights into how delayed impacts from interdependent policies affect the business processes of an energy service business venture. To understand the relationships beneath the dynamics of those small and developing ESCO markets in the European Union (EU), a system dynamics model of an ESCO venture was developed. The model simulation provides a powerful tool to improve understanding and accelerate learning of the policies that critically impact venture performance. The base case simulation shows an unattractive market value added (MVA) and a high probability of a firm’s failure. The demand simulation is quite sensitive to the word-of-mouth (WOM) parameter, and simultaneous initiatives to positively intensify it with incentive public policies such as low interest rate and demonstration projects significantly increased the MVA, reduced the probability of the firm’s failure, and consequently increased the widespread adoption of EPC.

PENGARUH ECONOMIC VALUE ADDED TERHADAP TOBIN Q DENGAN MARKET VALUE ADDED SEBAGAI VARIABEL INTERVENING

This study aims to analyze the effect of Economic Value Added on Tobin Q with Market Valueadded as intervening variable. The sample of this research is a manufacturing company listed onIndonesia Stock Exchange in 2011-2016. Data analysis using regression analysis. The resultsshowed that Economic Value Added did not affect Tobin Q and Market Value added (MVA)effect on Tobin Q. Market Value Added (MVA) did not become intervening variable betweenEVA and Tobin Q. Market Value added are not mediate Economic Value Added to Tobin QKeywords: Economic Value Added, Market Value Added, Firm Value

Value creation measures: an industry-based study

PurposeThe purpose of this paper is to identify the shareholder value creation measure best suited to express shareholder value creation for a particular industry.Design/methodology/approachThe analysis was performed on 192 companies listed on the Johannesburg Stock Exchange, classified into nine different samples or industries. Five shareholder value creation measures were examined, namely market value added (MVA), a market-adjusted stock return, the market-to-book ratio, Tobin’s Q ratio, and the return on capital employed divided by the cost of equity.FindingsAn analysis of the nine categories of firms led to the identification of different measures that are suited to express value creation. Stock returns did not provide an appropriate value measure. Instead, depending on the specific industry, Tobin’s Q ratio, MVA, and the market-to-book ratio should be used to measure and express value creation.Practical implicationsFor management, the value drivers identified for each industry present a clear indication of industry-specific variables upon which they can focus in operating activities to most efficiently increase shareholder value.Originality/valueUnlike previous studies that use only one or two different shareholder value creation measures as dependent variables, this study uses five different value creation measures. Another contribution of this study is the compilation of a unique set of value drivers that explain shareholder value creation separately for each of the nine different categories of firms.

THE INFLUENCE OF FINANCIAL PERFORMANCES ON INDONESIA’S STATE-OWNED BANKS TOWARDS SHARE RETURNS IN 2013-2016

The performance of financial statements shows the level of productivity in a company. Specific to banking sector, the performance of its financial statements can be analyzed from Economic Value Added (EVA) and Market Value Added (MVA). This study analyzes MVA and EVA are of state-owned banks consisting of Bank Tabungan Negara (BTN), Bank Negara Indonesia (BNI), Bank Mandiri and Bank Rakyat Indonesia (BRI). The results convey that Indonesia’s state-owned banks in giving share return to theirs shareholders are not influenced by Economic Value Added (EVA) and Market Value Added (MVA). There is an evidence that, EVA and MVA do not give any effect to share return because in the state owned bank in Indonesia, the investors have been very confident about the performance of banks in Indonesia so that without seeing the performance of the financial statements of investors have been very convinced from the fundamental point that the Indonesia state owned banks can bring benefits to investors

EVALUATION OF FINANCIAL PERFORMANCE USING VALUE ADDITION METRICS – A SELECT STUDY OF 'IT' COMPANIES IN INDIA

In today’s competitive world, value and wealth creation for shareholders are among the most important goals of businesses. For the sake of achieving his goals, the investor needs some instruments in order to measure the potential value of each investment opportunity. It is clear that these instruments are not capable of predicting the exact future, they just provide some piece of information and advice that help the investor in the decisions he makes. Among these criteria, the most common types are Return on Investment (ROI) and Earnings per Share (EPS). Despite the numerous applications of these instruments, theoretically, they are not related with shareholders’ value or wealth creation. In recent years, the modern evaluation techniques based on economic theories such as Economic Value Added (EVA), Market Value Added (MVA) and Shareholder Value Added (SVA) replace the accounting data-based criteria and have widely drawn the attentions. These criteria follow the performance assessment with regard to the changes in the value and alongside maximizing the long term shareholder returns. In this research paper, one of the most important criteria; i.e. Shareholder Value Added (SVA), is investigated from several viewpoints.

Flexibility in Measuring Corporate Financial Performance, EVA Versus Conventional Earnings Measures: Evidences from India and China

The paper empirically explores on the potential of economic value added (EVA), a value-based performance benchmark as an option to conventional earnings measures, with focus on two Asian emerging economies: India and China. Panel regression method has been adopted to compare the significance of EVA over return on equity (ROE), return on capital employed (ROCE) and earnings per share (EPS), in explaining and forecasting market value added (MVA), a proxy for shareholders’ wealth creation. The research uses data spanning 15 years (2002–2016) of 260 Indian and 254 Chinese non-finance companies. Moreover, the regression models are first estimated in-sample period (2002–2011) and then tested for predictability over the period 2012–2016 (out-of-sample period). The results indicate a positive and significant relationship between EVA and MVA, next only to ROCE, with an ability to forecast MVA for India. In contrast, EVA does not emerge as a consequential performance measure with EPS dominating the performance measurement space for China. Notwithstanding, EVA in conjunction with ROCE provides incremental explanation to variations in MVA for Chinese firms. Further, the study highlights the negative relationship of EVA with the value creation by Chinese firms, in spite of the fact that China has witnessed a substantially higher annual GDP growth rate over the period 2002–2014, in comparison with India, one of the plausible reasons that it is now observing a slowdown. In sum, EVA depicts a more credible picture of the industrial contribution in the economic growth of India and China.

Economic Value Added and Traditional Accounting Measures for Shareholder's Wealth Creation

This paper investigated performance measurement tools and shareholder’s wealth relationships in the context of Malaysian public listed construction companies. Conventional measures are still utilized by many Malaysian listed companies even though it has been criticized by many researchers. Both traditional accounting measures and economic measures fail to reflect a company’s true value due to the lack of long-term sustainability of a business. The study used panel data analysis techniques, particularly Error Correction Models (ECM) to test the relationship of error terms and panel Ordinary Least Square (OLS) regression to test the hypothesis. Panel data comprised of 280 observations over the period of 2003-2012 indicates that shareholder value is a function of performance measures. The results conclusively support the claims made by previous studies on the role of earnings per share, economic value added (EVA) and dividend payout ratio; and further support the potential usefulness of the performance metric for internal and external performance. Furthermore, market value added (MVA) is found to have a negative relationship with created shareholder value (CSV) contradicting with the theory that confirmed, the increase in shareholder value when there is an increase in stock market value and efficiency.

The Relationship between the Market Value Added of SMEs Listed on AIM Italia and Internal Measures of Value Creation The Role of Corporate Strategic Planning

Objectives - In saying that measurement of financial performance plays an important role in the capital allocation choices, the aim of this study is to test the relationships between Market Value Added (MVA), stockholders value measures and presence of formal strategic plan.Methodology - The study is among descriptive and correlational researches and using panel data methodology on sample of SMEs listed in AIM Italia. The time under study was from 2010 to 2015. In addition, the hypotheses of the research have been tested using Rahavard Novin software for data collection and SPSS 20.0 for data analysis.Findings - The results indicate that Refined Economic Value Added (REVA) has more correlation with Market Value Added (MVA) than Economic Value Added (EVA); in addition, the results obtained using panel data methodology shows that the use of strategic plans influences the relationship between value performance measures and MVA.Research limits - Data used for this study need to be subjected to more statistical tests in order to establish a more robust validity and reliability. It is necessary to acquire further strengthened data and assume a variety of conditional situations. It is expected that subsequent studies can use larger samples and diversified by sector, a broader geographic base and a multi-faceted analyses.Practical implications - This work offer necessary evidences in order to help capital market participants to make rational decision in investment process.Originality of the study - The originality of this study is the correlation between MVA, financial measures and use of strategic planning for value management.

Measure the Performance with the Market Value Added: Evidence from CSR Companies

An increasing number of firms in OECD countries are obtaining certification as Socially Responsible. Literature is sensitive in testing whether there is a relation between firm performance and Social Responsibility certification. In order to overcome problems related to the multiplicity of Corporate Social Responsibility (CSR) definitions and certifications, our work implements a CSR index based on the intersection between two of the three main international indices (Domini 400 Social Index, Dow Jones Sustainability World Index and FTSE4Good Index). By using this database in a panel framework, our work shows that among Corporate Performance Measures (CPF), Market Value Added (MVA) is affected by a firm’s social responsible behaviour and certification. The results support the idea that CSR firms have better long-run performance. Thanks to the reputation effect, they achieve higher sales volumes and profits and a reduction in long-run costs: these effects compensate the costs due to the certification.

Economic Value Added and Traditional Accounting Measures for Shareholder’s Wealth Creation

This paper investigated performance measurement tools and shareholder’s wealth relationships in the context of Malaysian public listed construction companies. Conventional measures are still utilized by many Malaysian listed companies even though it has been criticized by many researchers. Both traditional accounting measures and economic measures fail to reflect a company’s true value due to the lack of long-term sustainability of a business. The study used panel data analysis techniques, particularly Error Correction Models (ECM) to test the relationship of error terms and panel Ordinary Least Square (OLS) regression to test the hypothesis. Panel data comprised of 280 observations over the period of 2003-2012 indicates that shareholder value is a function of performance measures. The results conclusively support the claims made by previous studies on the role of earnings per share, economic value added (EVA) and dividend payout ratio; and further support the potential usefulness of the performance metric for internal and external performance. Furthermore, market value added (MVA) is found to have a negative relationship with created shareholder value (CSV) contradicting with the theory that confirmed, the increase in shareholder value when there is an increase in stock market value and efficiency.

Shareholder Value Index for Saudi Banks

This paper aims to examine the shareholder value efficiency and build a Shareholder Value Index for Saudi banks between 2010 and 2014. Shareholder value efficiency is measured using value based performance metrics and binary logistic regression model was adopted to develop the Shareholder Value Index for Saudi banks. The Shareholder Value Index developed provides the probability of a bank’s competence to create/erode shareholders' wealth. The study finds that Economic Value Added (EVA) is the value-based performance metric that comes closer than any other to capture the true Economic Profit and the market performance (Market Value Added) of banks. Positive EVA of most of the commercial banks denote that they are more Shareholder value efficient than Islamic banks. High Market Value Added (MVA) represents a highly positive outlook of the investors on the Saudi banks' performance. Value creation is significantly linked to high Net Operating Profit After Tax and a low cost of capital. The most significant observation is that not all banks with highest capital employed are the highest value creators. The Shareholder Value Index developed indicate that majority of Saudi banks demonstrate a higher probability of shareholder value creation. Few Islamic banks showed a less probability of wealth creation for the period of study and are predicted to improve the shareholder value creation ability through their aggressive strategy in the future.

Implementation of Economic Value Added and Market Value Added Analysis as Valuation Tools of Invest Feasibility

For the investors, financial statement is a benchmark of investors in assessing the company's performance. In fact, investors are not always receiving the accurate company's financial statements information and its levels of fairness are in doubt. The financial statement analysis with using financial ratios is not enough. The investors may need to use alternatives financial statement analyses techniques that reflect the actual company's performance. Therefore, both of the investors and the prospective can use Economic Value Added (EVA) and Market Value Added (MVA) analysis. With these technical analyses, the investors may know the company's performance where they are invested or to be used as a place to invest whether it has value added or not. With the results of these analyses, it is the expected for the investors to be more confident in making decision whether to buy, sell or hold the ownership in the company.

Acceleration effect of intangibles in the recovery of corporate performance after-crisis

This study explores the recovery in the Market Value Added (MVA) of European companies after the recent global economic crisis in 2008–2009. It introduces empirical evidence that intangible-intensive strategy in human and relational capital reinforces speed of the after-crisis correction for companies. Based on a panel dataset of more than 1600 listed corporations this research aims to discover drivers of Market Value Added trends in 2011–2013. The established results contribute to the understanding of the advantages that companies can exploit for the recovery after systematic shocks of markets. Our study demonstrates that intangible-intensive strategy not always enabled faster recovery speed. Meanwhile, it provided year-to-year acceleration of MVA growth after crisis.

The Influence of Inflation, Exchange Rate, Market Value Added and Market Capitalization Value on Stock Price

This study was conducted to examine the effect of inflation, exchange rate, market value added (MVA) and the value of market capitalization (NKP) to return the stock to the company's performance as a mediating variable. Inflation have effect negative and no significant to performance perusahaan. Hal this show that when happen enhancement level inflation then will performance company will experience Decline. Value exchange have effect negative and no significant to the performance of the company. This matter show that change value The exchange is not strong for influence the performance of the company. MVA has a positive effect and no significant effect on the company's performance. This shows that when MVA is high, then the company's performance is also high. This is due to the MVA illustrates the company' ability to generate or increase wealth for investors.

Shareholders' Value Analysis: EVA & MVA in Relation to Stock Market Returns with Reference to the Indian Cement Industry

Understanding the value analysis and value creation of a company is essential for every financial manager in different situations. The value determination is carried out in various situations which may give positive or negatives results, resulting in serious jolts to the shareholders as well as to the goodwill of the company. Therefore, examining the shareholder value analysis is required to understand financial performance and it is critical to know whether modern techniques are supportive in creating value to the shareholders or not. This paper study the value analysis through modern techniques such as Economic Value Added (EVA), Market Value Added (MVA) and Stock Market Returns (StMr) of select twenty cement companies in India. This study evaluates the performance of the selected companies in terms of economic profit and market value and also tries to find the important metric among selected variables for creating shareholder wealth. In this study, twenty companies have been selected based on their market capital in Indian cement industry during the decade of 2005-06 to 2014-15. The study uses statistical tools for selecting the best metric among the variables through Mean, Coefficient and Multiple Regression with Stepwise method with the help of SPSS.

Shareholders’ Value Analysis: Eva & Mva In Relation To Stock Market Returns With Reference To the Indian Cement Industry

Understanding the value analysis and value creation of a company is essential for every financial manager in different situations. The value determination is carried out in various situations which may give positive or negatives results, resulting in serious jolts to the shareholders as well as to the goodwill of the company. Therefore, examining the shareholder value analysis is required to understand financial performance and it is critical to know whether modern techniques are supportive in creating value to the shareholders or not. This paper study the value analysis through modern techniques such as Economic Value Added (EVA), Market Value Added (MVA) and Stock Market Returns (StMr) of select twenty cement companies in India. This study evaluates the performance of the selected companies in terms of economic profit and market value and also tries to find the important metric among selected variables for creating shareholder wealth. In this study, twenty companies have been selected based on their market capital in Indian cement industry during the decade of 2005-06 to 2014-15. The study uses statistical tools for selecting the best metric among the variables through Mean, Coefficient and Multiple Regression with Stepwise method with the help of SPSS.

Empirical Evidences of Value Creation from Banking Industry of India

In wake of recent economic reforms in India with an aim of stabilizing the economy of India under the era of globalisation, banking industry has experienced a canonical shift in terms of value creation practices, methods and metrics for measuring bank’s performance. Value based management has long been hailed as the major objective of financial management of banks. A new trajectory of value based performance evaluation metrics have evolved and became an imperative of evaluating the performance of banks. The present study has been undertaken with the objective to measure the performance and value creation in the selected banks. The selected sample was taken from the public and private sector banks listed on stock exchange in India. In this study, Economic Value Added (EVA) and Market Value Added (MVA) across the selected banks were calculated based on the accounting figures and their difference was determined. The results showed significant difference between economic value added and market value added in selected banks is quite meaningful and significant.

CONFIRMATORY FACTOR ANALYSIS INTERNAL DAN EKSTERNAL KEUANGAN, FREE CASH FLOW, DAN RETURN SAHAM PERUSAHAAN MANUFAKTUR GO PUBLIC DI INDONESIA

The negative impact of economic crisis in Asia to internal financial decision included investment decision, financing decision, and dividend decisions. This condition is loser if external factors such as inflation rate, interest rate, and exchange rate are not supported. Negative free cash flow including Economic Value Added and Market Value Added, depreciation of stock return indicate financial distress and reduction of shareholder wealth.The research used of Confirmatory Factor Analysis and the hypotheses are: 1. The influence of Inflation Rate (IR), Interest Rate, and Exchange Rate are significant to External Factor.2. The influence of Return on Equity (ROE), Fixed Asset Utilization (FAU), Capital Intensiveness (CI), Inventory Intensiveness (II), Receivable Intensiveness (RI), Margin Ratio (MR), Asset Profitability Ratio (APR) are significant to Investment Decision.3. The influence of Financial Leverage (FL), Short Term Liquidity (STL) and Cash Position (CP) are significant to Financing Decision.4. The influence of Plowback Ratio (PR) and Return On Fixed Asset are significant to Dividend Decision.5. The influence of Economic Value Added (EVA) and Market Value Added (MVA) are significant to Free cash flow.6. The influence of Price Earning Ratio (PER), Dividend Yield (DY), and Capital Gain Yield (Cap.G) are significant to Stock Return.The results of this research are significant influence to external factors, internal financial decision, free cash flow, and stock return; but inventory and receivable intensiveness, dividend yield are not significantly.

Shareholders’ Value Creation and Market Price of Share: A Study in Indian Context

Shareholders’ value creation has become a matter of concern in the world of financial management in recent times. Shareholders’ value creation refers to the net value addition for the shareholders. In the present corporate scenario, financial managers do not concentrate only on profit generation but also on value creation for their shareholders, to ensure the survival of the business in the long run. It has been observed that shareholders’ value creation is related to market price of share. In this paper, an attempt has been taken to measure shareholders’ value creation by five different approaches selecting few sample companies. The approaches are- Market Value to Book Value Ratio approach, Economic Value Added (EVA) approach, Market Value Added (MVA) approach, Shareholders’ Value Added (SVA) approach and Shareholders’ View Point approach. Further, we quantify the degree of association that exists between shareholders’ value creation and market price of share. The data analysis reveals that shareholders’ value per share and market value per share are positively correlated to a considerable extent.

Economic Value Added Dan Market Value Added Serta Perilaku Harga Saham Perusahaan Yang Listing Di Jakarta Islamic Index (Periode 2010-2014)

Stern Stewart & Co. introduced new methods of measuring financial performance based on the added value produced by the company, these methods being Economic Value Added (EVA) and Market Value Added (MVA). The purpose of this research is to analyze the effect of EVA and MVA toward the stock price of companies listed in Jakarta Islamic Index (JII) for the year period 2010-2014.The data used in this research are secondary data comprising of yearly data for the period 2010-2014. The analysis employed in this research is through using multiple linear regression analysis with α of 0.05.The research suggest that EVA and MVA partially and simultaneously have significance effect towards the stock price of the company enlisted in JII. With α of 0.162 or 16.2%, this shows that 16, 2% of stock price in JII is affected by EVA and MVA, whereas 83, 8% is affected by other variables.