Deeper Analysis of EVA and MVA

Oct 13, 2025 by wbrum.org 119 views

The Impact of Economic Value Added (EVA) and Market Value Added (MVA) on the Share Price of Banking Companies Listed on the Indonesia Stock Exchange (2009-2012)

Introduction

The financial performance of a company is a crucial factor in determining its share price. In the banking sector, where competition is high and the market is constantly evolving, understanding the impact of financial performance on share prices is essential for investors and companies alike. This study aims to analyze the influence of Economic Value Added (EVA) and Market Value Added (MVA) on the share price of banking companies listed on the Indonesia Stock Exchange (IDX) for the period 2009-2012.

Background

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a market capitalization of over $1 trillion. The banking sector is a significant contributor to the IDX, with over 30 banks listed on the exchange. The financial performance of these banks is a critical factor in determining their share prices, and understanding the impact of EVA and MVA on share prices is essential for investors and companies.

Methodology

This study used secondary data obtained from the official website of the Indonesia Stock Exchange (www.idx.co.id). A sample of 21 out of 32 banking companies was taken for the specified period. The variables used in this study consisted of EVA and MVA as independent variables, and stock prices as dependent variables. The study applied a significance level of 5% and used multiple regression models to analyze the collected data.

Results

The results of this study showed that EVA and MVA simultaneously had a positive and significant influence on the share price of banking companies listed on the IDX. However, in the partial test (T test), the results showed that EVA had no significant positive influence on stock prices, while MVA was proven to have a significant positive influence on the share price of banking companies listed on the IDX.

Deeper Analysis of EVA and MVA

Economic Value Added (EVA) is a measure of performance that takes into account the capital costs used to generate profits. In this context, EVA reflects how efficient the banking company is in the use of its capital to create value for shareholders. Although this study shows that EVA has no significant influence on stock prices, this could be caused by several factors, such as markets that are less sensitive to internal performance indicators in the short term, or investor expectations of long-term growth.

Market Value Added (MVA) measures the difference between the company's market value and the total capital invested. The positive MVA shows that the company is able to create additional value for its shareholders. The discovery that MVA has a significant influence on stock prices emphasizes the importance of market perceptions of company value. Increased MVA usually reflects good investment decisions, optimistic growth prospects, or effective innovations, which certainly contribute to the attractiveness of investors.

Research Relevance for Investors

From the results of this study, for investors, it is essential to understand that not all financial performance measures have the same impact on stock prices. MVA can be an indicator that is more relevant and sensitive to stock prices compared to EVA. Therefore, investors need to pay more attention to announcements relating to MVA from banking companies to make the right investment decisions.

Conclusion

This research provides valuable insights on how financial performance is measured through EVA and MVA can have a different effect on stock prices. This is also a call for companies to focus more on creating added value that can be measured by the market in order to improve the performance of their shares, especially in the competitive banking sector.

Implications for Future Research

This study has several implications for future research. Firstly, it highlights the importance of considering the impact of EVA and MVA on share prices in the banking sector. Secondly, it emphasizes the need for companies to focus on creating added value that can be measured by the market. Finally, it suggests that investors should pay more attention to announcements relating to MVA from banking companies to make the right investment decisions.

Limitations of the Study

This study has several limitations. Firstly, it only considered the impact of EVA and MVA on share prices in the banking sector. Secondly, it only analyzed the data for the period 2009-2012. Finally, it only considered a sample of 21 out of 32 banking companies.

Future Directions for Research

This study has several future directions for research. Firstly, it would be interesting to analyze the impact of EVA and MVA on share prices in other sectors, such as manufacturing or services. Secondly, it would be useful to analyze the data for a longer period, such as 2009-2015. Finally, it would be interesting to consider other variables, such as return on equity (ROE) or return on assets (ROA), in addition to EVA and MVA.

Conclusion

In conclusion, this study provides valuable insights on how financial performance is measured through EVA and MVA can have a different effect on stock prices. This is also a call for companies to focus more on creating added value that can be measured by the market in order to improve the performance of their shares, especially in the competitive banking sector.
Frequently Asked Questions (FAQs) about the Impact of Economic Value Added (EVA) and Market Value Added (MVA) on the Share Price of Banking Companies Listed on the Indonesia Stock Exchange (2009-2012)

Q: What is Economic Value Added (EVA) and how is it calculated?

A: Economic Value Added (EVA) is a measure of performance that takes into account the capital costs used to generate profits. It is calculated by subtracting the cost of capital from net operating profit after taxes (NOPAT).

Q: What is Market Value Added (MVA) and how is it calculated?

A: Market Value Added (MVA) measures the difference between the company's market value and the total capital invested. It is calculated by subtracting the total capital invested from the market value of the company.

Q: What is the significance of EVA and MVA in determining the share price of banking companies?

A: EVA and MVA are significant in determining the share price of banking companies because they reflect the company's ability to create value for shareholders. A positive EVA and MVA indicate that the company is able to create value for shareholders, which can lead to an increase in share price.

Q: What are the limitations of this study?

A: The limitations of this study include the fact that it only considered the impact of EVA and MVA on share prices in the banking sector, only analyzed the data for the period 2009-2012, and only considered a sample of 21 out of 32 banking companies.

Q: What are the implications of this study for investors?

A: The implications of this study for investors are that they should pay more attention to announcements relating to MVA from banking companies to make the right investment decisions. Additionally, investors should consider the impact of EVA and MVA on share prices when making investment decisions.

Q: What are the implications of this study for companies?

A: The implications of this study for companies are that they should focus more on creating added value that can be measured by the market in order to improve the performance of their shares. Companies should also consider the impact of EVA and MVA on share prices when making strategic decisions.

Q: What are the future directions for research based on this study?

A: The future directions for research based on this study include analyzing the impact of EVA and MVA on share prices in other sectors, such as manufacturing or services, analyzing the data for a longer period, and considering other variables, such as return on equity (ROE) or return on assets (ROA), in addition to EVA and MVA.

Q: What are the practical implications of this study for the banking sector?

A: The practical implications of this study for the banking sector are that companies should focus on creating added value that can be measured by the market in order to improve the performance of their shares. Additionally, companies should consider the impact of EVA and MVA on share prices when making strategic decisions.

Q: What are the theoretical implications of this study for the field of finance?

A: The theoretical implications of this study for the field of finance are that it provides new insights into the relationship between EVA and MVA and share prices. Additionally, it highlights the importance of considering the impact of EVA and MVA on share prices when making investment decisions.

Q: What are the policy implications of this study for regulatory bodies?

A: The policy implications of this study for regulatory bodies are that they should consider the impact of EVA and MVA on share prices when making regulatory decisions. Additionally, regulatory bodies should encourage companies to focus on creating added value that can be measured by the market in order to improve the performance of their shares.