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Measuring shareholder value in Tunisian banking

Measuring shareholder value in Tunisian banking This paper examines the relative and incremental information content of economic value added (EVA) and traditional performance measures, focusing on the Tunisian banking industry. Our sample comprises only publicly listed commercial banks, and comprises ten banks over a period of ten years (after liberalisation periods from 1997 to 2006). Regression analysis indicates the EVA measure that accounts for the specifics of banking (EVA BKG ) is of very little explanatory power. In contrast, intermediation and interest margins are more useful than other earnings measures in explaining the market value of commercial banks. Also, the standard economic value added (EVA STD ) seems to explain better shareholder value creation than a wide range of simple accounting and other performance indicators. Incremental information content tests show that EVA STD components contribute marginally to information already available to the market participants (i.e. the intermediation margin). These results have implications to banking-related academicians and practitioners. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Accounting, Auditing and Performance Evaluation Inderscience Publishers

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd. All rights reserved
ISSN
1740-8008
eISSN
1740-8016
DOI
10.1504/IJAAPE.2011.037728
Publisher site
See Article on Publisher Site

Abstract

This paper examines the relative and incremental information content of economic value added (EVA) and traditional performance measures, focusing on the Tunisian banking industry. Our sample comprises only publicly listed commercial banks, and comprises ten banks over a period of ten years (after liberalisation periods from 1997 to 2006). Regression analysis indicates the EVA measure that accounts for the specifics of banking (EVA BKG ) is of very little explanatory power. In contrast, intermediation and interest margins are more useful than other earnings measures in explaining the market value of commercial banks. Also, the standard economic value added (EVA STD ) seems to explain better shareholder value creation than a wide range of simple accounting and other performance indicators. Incremental information content tests show that EVA STD components contribute marginally to information already available to the market participants (i.e. the intermediation margin). These results have implications to banking-related academicians and practitioners.

Journal

International Journal of Accounting, Auditing and Performance EvaluationInderscience Publishers

Published: Jan 1, 2011

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