Business, Management and Accounting
8 years ago

Accounting measures outshine value-based approaches in predicting stock returns

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The explanatory power of accounting measures, EVA and MVA on stock returns: Evidence from Thailand stock market
Suksom Charoendeesawat

Paper Summary

Investors in Thailand use accounting measures like EPS, ROA, ROE, and ROS to evaluate companies, but are less familiar with EVA and MVA. A study on 190 companies from 2006-2010 found that ROA is most linked to stock returns, especially in certain sectors. Surprisingly, EVA's impact on stock returns varies by company characteristics, with low book to market ratio companies showing a connection. Overall, traditional accounting measures are more closely tied to stock returns than EVA and MVA strategies.

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