Profitable trading strategies using EVA
by B. Brian Lee, Byeonghee Choi, George Kanaan
Global Business and Economics Review (GBER), Vol. 6, No. 1, 2004

Abstract: We examine whether or not the value relevant information of EVA is fully incorporated in stock prices by constructing trading strategies using signs of changes in both earnings and EVA. The portfolio of stocks with negative changes in earnings coupled with positive changes in EVA yields higher cumulative future returns than do benchmark portfolios over several years (from four to six future years), from the year in which investment portfolios are formed. The multi-regression model shows consistent results. Thus, we conclude that the lower association of stock returns with EVA than with earnings might arise from investors' functional fixation on earnings numbers, not on lower value relevance of EVA.

Online publication date: Mon, 07-Feb-2005

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the Global Business and Economics Review (GBER):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com