The effect of economic value-added on market value-added (Applied study of a sample of companies listed in the Iraq Stock Exchange)

Abstract

The research seeks to test the impact of the economic value-added on the added market value of a sample of Iraqi industrial companies listed in the Iraqi Stock Exchange.The research problem was represented in the continuous decline in the values of the companies shown by the published financial reports that are included in the calculation of the added market value, in addition to the absence of the use of non-traditional measures (economic value-added and market value-added) by Iraqi companies, and the sufficiency of traditional measures when measuring profitability.The research was conducted in the Iraqi Stock Exchange, the industrial sector, out of a total of 25 companies representing the research community, while the sample consisted of 4 industrial companies only because the data for the rest of the companies were not complete. Over the course of 14 years extending from 2005 to 2018, the researchers used the measure of the economic value added to extract the economic profit and the added market value to extract the value added by the company to the book value of the assets. The researchers relied for the purpose of testing the effect of the independent variable on the dependent variable on the simple regression. The results showed that the added economic value of all companies had a significant effect on the added market value. The most important recommendations were that the added market value should be the basis when designing and developing corporate and business strategy. Also, managers should base their investment decisions by using economic value added and opportunity comparison to achieve the best performance in making those decisions