Study of Application Equity Economic Value Added (EEVA) and True Value Added (TVA) in explaining of Tobin’s Q ratio: Evidence from Tehran Stock Exchange

Investors and financial managers nowadays increasingly demand reliable measures which would allow them to examine the information of the firm real profitability. To this effect, in recent years, researchers inside and outside the country have been exploring a variety of economic profit measurement indicators, including Cash Value Added (CVA), Created Shareholder Value (CSV), Shareholder Value Added (SVA), Adjusted Economic Value Added (AEVA), Refined Economic Value Added (REVA), Market Value Added (MVA), Economic Value Added (EVA) and Residual Income (RI), each of which with a different information content in reflecting value and performance of companies. And to the same effect, this research investigates explanatory power of two other economic-profit-based indicators, namely True Value Added (TVA) and Equity Economic Value Added (EEVA), for Tobin’s Q of the 48 selected listed companies on Tehran Stock Exchange (TSE) between 2003 and 2012. For test of hypotheses, first, using Kolmogorov-Smirnov test, normal distribution of data was examined the result of which confirmed normality of the understudy data. However, the results of F-test in study of the hypotheses indicated absence of a significant association between TVA, EEVA, and Tobin’s Q.

True Value Added (TVA), Equity Economic Value Added (EEVA), Tobin’s Q.