ارزش افزوده بازاری و معیار های حسابداری مرسوم: کدام شاخص به بهترین شکل نرخ بازده سهام را در شرکت های مالزیایی پیش بینی می کند؟ Market value added and traditional accounting criteria: Which measure is a best predictor of stock return in Malaysian companies

Introduction Maximization of shareholder value is the main purpose of each company. In this regard, evaluating companies’ performance is vital in ensuring and achieving optimal allocation of limited resources. Large numbers of accounting performance measures have been developed. These criteria are often criticized for two reasons namely, not including the companies’ capital cost and they are based on accounting information, which could be distorted by Generally Accepted Accounting Principle (GAAP). For this reason, the value based measures are presented to resolve the limitation of accounting measures (Nakhaei et al., 2013). According to, Erasmus (2008b, p.66), “Value-based (VB) financial performance measures are often advanced as improvements over measures facilitates the evaluation of value creation. Furthermore, they attempt to remove some accounting distortions resulting from the limitations of conventional accounting information.” Incremental comparisons ask whether one accounting measure provides information content beyond that provided by another, and apply when one measure is viewed as given and an assessment is desired regarding the incremental contribution of another (e.g., a supplemental disclosure). Relative comparisons ask which measure has greater information content, and apply when making mutually exclusive choices among alternatives, or when rankings by information content are desired (e.g., when comparing alternative disclosures). Questions of both incremental and relative information content arise frequently in accounting. However, few previous studies have examined questions of relative information content. Possible explanations include unfamiliarity with the relative versus incremental distinction, and the additional statistical complexity involved in testing for relative information content (Biddle et al., 1995). MVA is an option to approximate the stockholder value creation. MVA is a contrast between market value of company and capital supplied by the investors over a period of time. MVA is connected to EVA because it is the present value of future EVA value (Baum et al., 2004). Hence, EVA is a measure of performance in a given year, while MVA is the increasing calculate of future years (Kramer & Peters, 2001). Moreover, EVA is an internal performance measure and MVA is an external performance measure (Rahnamay-Roodposhti et al., 2006). Internationally, there are many studies directed to recognize the relationship between accounting and value based financial performance measures with stock return, but most of these studies have been managed in developed countries and very little research has been conducted on EVA in Asian countries specially in Malaysia (Sharma & Kumar, 2010). In addition, more research is needed on performance measures tools, especially on value based criteria (Al Mamun & Abu Mansor, 2012; Ismail, 2006). Subsequently, there have been very little research conducted on MVA in Asian countries, including Malaysia (Al Mamun & Abu Mansor, 2012; Sharma & Kumar, 2010). The study aimed to examine the relative and incremental information content between MVA as proxy of value based measures and accounting measures (NI, NOPAT, & EPS) with stock return on non-financial firms listed in Bursa Malaysia over the period 2002 to 2011. In other words, this study seeks to investigate whether MVA is a superior measure in prediction of stock return compared to NI, NOPAT and EPS. The remainder of the paper is organized as follows; literature review, hypothesis, research variables, methodology, empirical findings, conclusion, limitations, and recommendations for future research. Literature review Finding a superior measure to evaluate a company’s performance is one of the important subjects of recent financial researches. MVA is an option to approximate the stockholder value creation. MVA is a contrast between market value of company and capital supplied by the investors over a period of time. MVA is connected to economic value added (EVA) because it is the present value of future EVA value (Baum et al., 2004). Moreover, EVA is a measure of performance in a given year, while MVA is a market generated number that we calculate by subtracting the capital invested in a firm from sum of the total market value of the firm’s equity and the book value of its debt (Kramer & Peters 2001). MVA is explained as the difference between the firm’s market value (including equity and debt) and the total capital invested in the company (Young & O’Byrne, 2001). It is an external performance measure, which is considered to be the best index of creation shareholder value. MVA has presented a new shareholder value measure by Stewart (1991) which describes the value market adds over the book value of invested capital (Khan et al., 2012). Karpik and Belkaoui (1990) used market model and found that value added variables process incremental information content beyond accrual earnings and cash flows in the context of explaining market risk. Likewise, Peixoto (2002) examined the relative information content of EVA against operational profit (OP) and net profit (NP). The results illustrated that net profit (NP) have provided more explanatory power beyond operational profit (OP) and EVA in relevant of total stock return (dependent variable). De Wet (2005) investigated the relationship between EVA and traditional accounting measures (OCF, ROA, EPS, and DPS) with MVA. The study rooted on the data of firms listed on the JSE South Africa from 1994-2004.The findings discovered that year-on-year basis; EVA did not reveal the strongest association with MVA. The results also demonstrated the strongest association between MVA and operational cash flow (OCF). Furthermore, the study also found very little relationship between EPS and DPS with MVA. Furthermore, Wong (2005) examined the impact of EVA and traditional performance measures (ROA, ROE, and EPS) on stock returns in the public companies listed in the main market of Bursa Malaysia for the year 1990-2000. The findings revealed that ROA, ROE, and EPS have significant influence on stock returns. Nonetheless, EVA was found to be the worst performer in predicting stock returns. Beside, Yaghoob-nejad and Akaf (2007) studied the relationship between EVA, residual income (RI), return on sales (ROS), return on investment (ROI), and MVA on companies listed in Tehran stock exchange (TSE). Their results revealed there is meaningful relationship between EVA, RI, ROS, and ROI with MVA. Ismail (2011) also used EVA as a predictor for predicting company performance after 1997 economic crisis. His results showed that EVA had a better relationship with stock return than traditional tools (EPS, DPS, and NOPAT) for the period of 1997-2002, for the main board company listed in Bursa Malaysia. Talebnia and Shoja (2011) investigated the relation between market Value Added (MVA) to earnings ratio and economic value added (EVA) To earnings ratio in companies listed on Tehran Stock Exchange over the period 2003 to 2007. The findings exhibited that there is a weak positive relationship between MVA to earnings ratio and EVA to earnings ratio. Thus, EVA to earnings ratio as an internal performance measure cannot predict the market value of firms. Ramana (2005) used regression analysis to examine the correlation between EVA and MVA in Indian companies, and compared it with common measures of accounting (net operational earnings after tax, earnings before interest and tax, etc.). The results of the study suggest EVA does not outperform common accounting criteria. Likewise, Ghanbari and More (2007) empirically tested the relationship between EVA and MVA in Indian automobile industry over the period 2001- 2005. Their findings indicated that there are strong evidences to support Stern-Stewart’s claim that EVA is greater to the traditional performance appraising, and it is the best internal evolution of firm success in adding value to shareholders’ investments. Accordingly, Yahaya and Mahmood (2011) measured the property firms’ performance under EVA criterion. Their sample involved 27 Malaysian property firms over the period of 1997-2006. Their results revealed that most Malaysian property firms failed to generate enough revenue for covering their capital cost. Therefore, these companies are failure in creating company wealth. Pourali and Roze (2013) also studied the relationship between EVA, REVA, and accounting criteria with MVA in firms listed in TSE over the period 2006-2010. The findings showed there is positive and significant relationship between MVA as dependent variable and all independent variables (EVA, REVA, ROA, ROE, and EPS). Additionally, Nakhaei et al. (2014) examined the relationship between EVA, return on assets (ROA), return on equity (ROE), net income (NI), and earning per share (EPS) with share market value (MV). The sample involves 87 non-financial companies listed in Tehran Stock Exchange (TSE) over the period 2004–۲۰۰۸٫ The results indicated there are meaningful relationship between EVA, ROE, NI, and EPS with MV, but there is not meaningful association between ROA and MV.