Wan Mahmood, Wan Mansor and Norfarah Hani, Yahaya (2008): Creating Wealth for Shareholders: Evaluating the Performance of the Malaysia Property Companies.
Download (239kB) | Preview
This paper measures property companies’ performance under new economic performance metric known as Economic Value Added (EVA) and identifies which companies perform better. The EVA of 27 Malaysia property companies are computed and analysed during the periods of 1997 through 2006. The EVA is an economic performance metric proposed by Stern Stewart Management Services. It claims to have successfully eliminated financial and accounting distortions and provides a true measure of a company’s success in driving shareholder value. Overall, the result of the present study shows that most property companies in Malaysia fail to generate enough income to cover their cost of capital, and thus indicating failure in creating corporate wealth. In order to have positive EVA in the future, firms must improved their strategic and scenario planning. In realizing this, management should focus more on investing capital in the high return projects and at the same time improving on optimal capital structure.
|Item Type:||MPRA Paper|
|Original Title:||Creating Wealth for Shareholders: Evaluating the Performance of the Malaysia Property Companies|
|Keywords:||Wealth creation, Economic Value Added, Malaysian property companies, performance, NOPAT|
|Subjects:||L - Industrial Organization > L8 - Industry Studies: Services > L85 - Real Estate Services
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment; Long-Term Capital Movements
|Depositing User:||WANMANSOR WANMAHMOOD|
|Date Deposited:||13. Apr 2009 04:57|
|Last Modified:||11. Feb 2013 18:53|
Ali, F, Desai, A.S. Katz, J.P. (2003), “Wealth creation and managerial pay: MVA and EVA as determinants of executive compensation”, Global Finance Journal 14, pp. 159-179.
Athanassakos, G. (2007), “Value-based management, EVA and stock price performance in Canada”, Management Decision, 45, pp. 1397-1411.
Lindholm, A.L. and Levainen, K.I (2006), “A Framework for Identifying and Measuring Value Added by Corporate Real Estate”, Journal of Corporate Real Estate, 8, pp. 38-46.
Biddle, G.C., Bowen, R.M. and Wallace, J.S. (1997), “Does EVA beat earnings? Evidence on associations with stock returns and firm values”, Journal of Accounting and Economics, 24, pp.301-36.
Biddle, G.C., Bowen, R.M. and Wallace, J.S. (1998), “Economic Value Added: Some empirical EVAdence”, Journal of Managerial Finance, 24 11.
Brewer, P.C., Chandra, G. and Hock, C.A. (1999), “Economic Value Added (EVA): Its uses and limitations”, SAM Advanced Management Journal, 64, pp. 4-11.
Brennan, M.J. (1990), “Latent Assets”, Journal of Finance, 45, pp.709-29. Fiordelisi, F. (2007), “Shareholder value efficiency in European banking”, Journal of Banking & Finance, 31, pp. 2151-2171.
Jeffrey, M. B., John A. B., Todd, T. M and Anjan V. T (1997), “The Search for the Best Financial Performance Measure”, Financial Analysis Journal, Association for Investment Management and Research. 53, pp. 11-20.
Fogerberg, L. and Griffith, J.M. (2000), “Control and Bank Performance”, Journal of Financial & Strategic Decision, 13, pp. 63-69.
Krumm P.J.M.M. and Vries, J.D. (2003), “Value Creation through the Management of Corporate Real Estate”, Journal of Property Investment & Finance, 21, pp. 61-72.
Naser, K Karbhari, Y and Mokhtar, M.Z (2004), “Impact of ISO 9000 registration on company performance: Evidence from Malaysia”, Managerial Auditing Journal, 19, pp 509-516.
Ooi, J.T.L. and Liow, K.H. (2002), “Real Estate Corporations: the quest for value”, Journal of Property Investment and Finance, 20 pp. 23-35.
Ooi, J.T.L. and Liow, K.H. (2004), “Does Corporate Real Estate Create Wealth for Shareholders?” Journal of Property Investment and Finance, 22 pp. 386-400.
Pagourtzi, E. and Assimakopoulos, V. Hatzichristos, T and French, N (2003), “Real Estate Appraisals: A review of Valuation Methods”, Journal of Property Investment & Finance, 21, pp. 383-401.
Stevenson, S. (2000), “Evaluating the Investment Attributes and Performance of Property Companies”, Journal of Property Investment & Finance, 19 , pp. 251-266.
Stewart, G.B. III, (1994), “EVA: fact and fantacy,” Journal of Applied Corporate Finance, 7, pp 71-84.
Tully, S. (1994), ”America’s best wealth creators”, Fortune, 130, pp. 143.
Villiers, J. (1997), “EVA Caused by Inflation”, Journal of Economics and Business, 49, pp. 285-300.
Wet, J.H and Hall, J.H (2004),” the relationship between EVA, MVA and leverage”, Meditari Accounting Research,12 , pp. 35-59.