Like all corporate buzzwords, "economic value added" combines some truth with some chaff. This article presents recent empirical evidence that helps to sort them out. Long known as "residual income," economic value added has been marketed successfully by consultancies in recent years as a...

This study tests assertions that Economic Value Added (EVA) is more highly associated with stock returns and firm values than accrual earnings, and evaluates which components of EVA, if any, contribute to these associations. Relative information content tests reveal earnings to be more highly...