ANALYSIS OF SHAREHOLDERS’ ECONOMIC VALUE ADDED OF SELECTED LISTED BANKS IN GHANA (2006-2010)

PADMORE ODURO 143 PAGES (29694 WORDS) Finance Thesis

ABSTRACT 

The  study  analysis  shareholders’  economic  value  added  (EVA)  as  a performance  measure  of selected listed  Banks in Ghana  to provide evidence about  its  ability  as  a  measure  compared  to  conventional  accounting  ratios: return on equity (ROE), return on assets (ROA) and earning per share (EPS). To  achieve  this,  EVA  of  listed  banks  on  the  Ghana  Stock  Exchange was  compared  with  traditional  accounting  ratios  ROE,  ROA  and  EPS  in relation  to  share  price  (SP)  and  MVA  with  the  aim  of  assessing  value  for shareholders. Purposive sampling technique was used in selecting eight banks listed on  the  Ghana  Stock  Exchange  from  2006  to  2010.  Secondary  data  was consulted  and  panel  regression  technique  generalized  least  square  (GLS) model was employed. The  study  concludes  that,  variation  in  EVA  is  highly  significant  in explaining  variation in  both  SP  and  MVA  than  reported  earnings.  However, ROE  performed  better  than  EVA  in  explaining  variation  in  MVA  but  EVA performed better in explaining variation in SP. The study therefore recommends that listed banks consider the use of EVA as a performance measure for shareholder value maximization