The Empirical Research On EVA Information Content Based On Companies Listing On GEM

GEM has been widespread concerned since it was publicly traded on October 30, 2009. With the steady expansion of market size, the information of listing companies on GEM is in increasing demand. Meanwhile, the rapid development of the GEM welcomed by the market, resulting in a certain amount of foam, the overall valuation levels being high. Therefore, a reasonable measure of the GEM to explore the true business value and to judge whether the companies listing on GEM brings real value to shareholders is particularly important. With EVA theory’s application in the assessment of the central enterprises, EVA concept receives more and more attention. Then whether the concept can be applied to the companies listing on GEM? Can EVA provide information superior to the traditional indicators?To solve these problems, we rely on theories of enterprise value and the information content, combining with the characteristics of companies listing on GEM, building suitable EVA calculation model for GEM. EVA indicators like EVAPC, ROC, WACC and traditional accounting indicators like EPS, ROE, CFOPS, SGR are selected as explanatory variables to MVAPC be interpreted as a variable. We get a total of 465 samples according to the principle of sample selection between 2010 and 2012. Through descriptive statistics, regression analysis, correlation information content study and incremental information content study, it is concluded that ROC can explain 53.4% of MVAPC which is the highest in all the indicators. In terms of relative information content, EVA indicators could explain 53.6% change of MVAPC, significantly better than traditional accounting indicators. In terms of incremental information content, EVA can provide up to 35.8% of the incremental information based on traditional accounting indicators, while the added explanatory power of traditional accounting indicators for EVA indicators is only 0.9 %. So EVA indicators are superior to traditional accounting indicators in both relative information content and incremental information content. It is advised that managers in GEM companies, regulators and investors for GEM should attach importance to the concept of EVA and boost the healthy development of GEM using EVA theory.