haku: @indexterm VALUE ADDED / yhteensä: 205
viite: 11 / 205
| Tekijä: | Forker, J. powell, R. |
| Otsikko: | A comparison of error rates for EVA, residual income, GAAP-earnings and other metrics using a long-window valuation approach |
| Lehti: | European Accounting Review
2008 : VOL. 17:3, p. 471-502 |
| Asiasana: | accounting accounting standards value added residual income earnings valuation quality measurement |
| Kieli: | eng |
| Tiivistelmä: | The two measures commonly used in the empirical literature to gauge the quality (henceforth as: qty.) of earnings are predictability and variability. Hence, these also gauge the decision usefulness to investors. This study adopts both measures to empirically examine the relative qty. of Stern Stewart's measure of economic value added (EVA) compared to generally accepted accounting principles (GAAP) earnings, cash flows, residual income and other mandated metrics in the USA and U.K. It is found that EVA and other residual income metrics consistently give rise to lower average valuation errors, thus having higher predictability across a variety of windows and terminal dates. In addition, the variability of valuation errors, EVA performs best in the USA and third in the U.K. It is srongly indicated that differences btw. residual income constructs, incl. EVA, are generally small but that earnings qty. will be improved by recognition of a cost of equity capital in measuring reported income. |
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