The Positive Study Of Value Relevance About Evaluate Indexes On Value Based Management

Operation performance evaluation which is defined the change of value of corporation during a certain period is one of those key contents of VBM, and is also important assure continuable value creation. Value relevance describe the expectative relationship between evaluate indexes and market value of equity. The studies method of value relevance include Relative Association Studies and Incremental Association Studies. The paper only use RAS which compare the market value change of stock with selected evaluate indexes, using regressive analyses to test the difference of determinant coefficient R~2. If one evaluate indexes has higher R~2, we can deem that the index has the more value relevance.The paper selected 4 indexes ,such as Earning Per Share(EPS), Operating Cash Flow per share(CFO),Return on equity(ROE) and percentage Change in Net Profit(NPC), representing traditional financial indexes in the positive studies. On the other hands , we designed a set of measures and formulas based on actual accounting system of China to calculate value indexes, such as EVA,FCF,CVA of per share and CFROI, representing in the studies.Return regression model is used in the positive studies. The samples are 112 opening company in shanghai or shenzhen stock exchange from 4 traditional industry, such as steel, general merchandise, colored metal and port. The dependent variables are return of stock of sample company in 2005, and the independent variables are the value indexes or the traditional indexes selected. The statistic analyses tool which used in the studies is data analyses of EXCEL. There are two steps process, the first step is to calculate determinant coefficient R~2 each of evaluate indexes, the second step is use Mann-Whitney Test to judge the degree of value relativity of two kinds of indexes.The studies results show the kind of value indexes is distinct better than of traditional financial indexes. So we can conclude it is reasonable that the experts' advice to use value indexes as evaluate indexes in VBM.