The Comparative Study On The Explanatory Power To The Rate Of Stock Return Between Accounting Indicators And EVA

With the development of China’s stock market, it became the pursuit and the goal for more and more listed company to create more value for the shareholders, and to increase the value of the listed company is also play an important role in improving the ability of an enterprise’s management. At the end of 20’s century, the Economic Value Added (short for EVA) index which is proposed by an American company named Stern Stewart has become an important index to measure whether the enterprise could create the value to shareholders effectively. The index shows it to us only the capital surplus which is created by the company beyond its costs, the enterprises can really create value for its investors. And the Market Value Added (short for MVA) is equal to the future value of EVA. MVA is an important index as a link between EVA and the market value. The index of EVA was recognized as the best ability to create value for investors in foreign company.In order to provide the investment advice to shareholders more effective, especially for those institutional investors who need to do fundamental data study, we compare the EVA index to the traditional economic indicators, by combined the method of theoretical analysis and empirical research, we will analysis the relativity between EVA and stock returns, to investigate whether the EVA index system has better ability on how to explain the changes in the rate of shock return. In the theory section of this article, we start from the EVA theory, the adjustment method and the ability to assess the value of a company, we analysis the EVA value to the investors, and introduces the MVA index which can reflect the future value of EVA into the EVA system. We will not only consider the ability of a company on how EVA explains the stock return variation, but also discussed the future changes in stock returns for the enterprise. The set of MVA indicators make the variable system more plentiful and rigorous. Then we will explain the concept of the stock returns in this article, and summarizes the significance of stock returns to the listing Corporation and the investors. The empirical part of the article, we find out 1273 listing Corporation in Shanghai and Shenzhen during 2011 to 2013 which are in line with the conditions of empirical research as the study sample. We begin from the correlation between the traditional enterprise accounting indexes and the stock returns, and then make a comparative analysis of EVA index, MVA index and traditional accounting indicators of the explanatory power of stock returns, finally, establish a comprehensive index system to analyze the correlation of different financial indicators and stock returns, EVA index, MVA index have stronger explanatory power than traditional accounting indicators in stock returns. And make a further analysis of the related affecting factors in stock returns, In addition to some related financial factors in the enterprises’ value, it’s also including some non financial index.