Evaluating the Relationship between Economic Value-Added and Stock Return in Companies Listed at Tehran Stock Exchange

Maximization of wealth is the major purpose of a business unit. Nowadays, economic value added (EVA) is considered to be the most important criterion for evaluation of internal performance. On the other hand, stock return is another key factor in decisions of the stock. It provides some information which is used by many potential and actual investors for financial analysis and prediction. Thus, the present study aims at evaluating the relationship between economic value-added and stock return of companies listed at Tehran Stock Exchange from 2004 to 2010. The samples are chosen by the use of systematic elimination method and include 70 companies. Here, EVA is the dependent variable and stock return is the independent variable. The study proposes a hypothesis explaining the relationship between economic value-added and stock return. Excel and SPSS 17 are used for data analysis. Statistical methods include the correlation coefficient (R), determination coefficient, significant t- and f-statistics. Results of testing the hypothesis with linear regression method indicate a significant and positive relationship between economic value-added and stock return.