The Relationship between Economic Value Added with Liquidity and Returns in Companies Listed in Tehran Stock Exchange

Economic Value Added is one of the most useful measures for managers’ performance evaluation. Another economical criterion used for distinguishing between company’s market value and invested capital in the company is market value added. In this paper it has been tried to study the relationship between economic value added with liquidity and returns of listed companies in Tehran Stock Exchange. For this purpose we have a sample of 510 companies who have been present in exchange market during the years of 2005-2010. The companies selected for our sample are those which their financial statements are available for the mentioned period, their fiscal year hasn’t been changed during the above mentioned period, the end of their fiscal year is the same, i.e. the last month of each year in Iran and their stock have been traded during the mentioned years. With application the above mentioned conditions the number of research sample reduces to 98 companies. Liquidity and returns are dependent research variables, economic value added is independent variable and controlled variables include company size and the ratio of book value to market value of equity. In this paper the regression model has been used. The results of the research indicate that there is a positive and significant relationship between economic added value and stock liquidity. Also there is a significant and positive relationship between economic added value and returns. Finally the results indicate that there is a significant difference in the relationship between economic added value with liquidity in listed companies in Tehran Stock Exchange and returns.

Keywords:

Economic added value , liquidity , Returns , Tehran Stock Exchange