مطالعات تجربی حسابداری مالی (Mar 2004)
Relationship between Internal Measures of Value Creation and External Measures of Operation Evaluation
Abstract
Valuation of securities by economic value added (EVA) model and Free cash flow (FCF ) model i s a current procedures in free economy societies. Using such models requires long and complex calculations, therefore, they seem to be difficult to implement in the first sight. One of the objectives of the present study is to see whether by using accrual accounting reports, in the present situation i n Iran, is i t possible to value business entities and their share values. To support the EVA and FCF models empirically, we need to study the relationship between the value creation measures (internal measures of operation evaluation ) and values the judgment of financial markets (external measures of operation evaluation ) . This research is in the field of accounting and financial management and its hypotheses are and in connection with the relationship between value creation measures, i.e. EVA and FCF measures, financial market measures such as, market value (MV) and market value added (MVA). The results of this study suggests that with some adjustments to accounts and financial reports we are able to value business entities and their shares in a given time period, and report the gap between share values, based on the EVA and the FCF models , and market values of those shares. The specific results from testing the hypotheses in this study dictate that i n most industries there is a meaningful relationship between internal measures of creating value market measures of business entities under study.
