Eva Analysis

Topics: Capital asset pricing model, Earnings before interest and taxes, Investment Pages: 3 (908 words) Published: December 23, 2012
Importance of the theories and implications on corporate financial decisions in Malaysia As business grows wider and complex across the border, there is a demand for better valuation tool to evaluate the performance of the business. It is important to adopt more innovative performance metrics so that the company’s management behaviors can be closely monitored to achieve the goal of maximizing the shareholders’ benefits. It is also important to access a firm’s value for any decision making regarding business expansion or contraction. According to the article of The Chartered Institute of Management Accountants (CIMA), “Latest Trends in Corporate Performance Measurement (1992)”, many companies were experiencing difficulties in implementing measurement frameworks and these statements have been brought to today. There is a study conducted by Dr. Issham Ismail in Malaysia with the purpose to examine the relationship between EVA and the company performance in Malaysia. The study indicates that EVA has a strong relationship with stock return as compared to other measures due to its focus on long-term performance. EVA enhances stock performances by including more informational content in describing the stock returns. According to the study, EVA is considered as a better alternative to other traditional valuation tools such as EPS, ROE, etc. Its characteristic of transparency and capacity to provide more important information helps investors in Malaysia to make better investment decision as well as the resources allocations decisions. Besides that, EVA and MVA can be also treated as performance measures and signals for any strategic change (Lehn and Makhija, 1996). There is another study conducted by Norfarah, Suhaila and Wan Mansor in Malaysia regarding the adoption of EVA on real estate corporations in Malaysia. In Malaysia, real estate sectors have grown to become a large sector and continue to develop for the past two decades even through difficult economic period....
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • A Discussion About Organization Chart Features in Eva Air Corporation Research Paper
  • Analysis of Evita Essay
  • Fundamental Analysis and Stock Essay
  • Essay on “Show How the Pairing of That Eye, the Sky and Eva Luna Gave You an Understanding of How Authors Tim Winton and Isabelle Allende...
  • Financial: Fundamental Analysis and Superior Investment Results Essay
  • Zimbabwe Stock Exchange Techical Analysis Essay
  • Essay about Analysis on Burger King Worldwide Inc
  • Essay on Financial Statement Analysis of the Banking Sector

Become a StudyMode Member

Sign Up - It's Free