ECONOMIC VALUE ADDED AND FIRM VALUATION IN NIGERIA
ECONOMIC VALUE ADDED AND FIRM VALUATION IN NIGERIA

Summary/Abstract: This study examines the impact of economic value added on firm valuation in Nigeria. The study uses three proxies to capture firm valuation. They include income base of firm valuation that is measured as discounted cash flow (DCF), asset based of firm valuation using net book value (NBV) and market-based approach of firm valuation using publicly traded prices in the stock exchange (SP), while the explanatory variables (EVA) was measured as the company’s profit after full cost of capital, while Firm size (FZE) and Leverage (LVG) are use as control variable. The study shows that EVA has a significant effect on firm valuation. The study recommended that successful value-based management firms should maintain that the technical accounting requirement of EVA is straightforward and makes only minimal adjustments to their accounting procedures. To give investors a normal return on their investment in the company's shares, managers should work to boost future EVA.

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