The Survey of Relationship between Economic Value Added (EVA) and Return on Equity (ROE) in Tehran Stock Exchange (TSE) During 2003–2006

The Economic Value Added is a technique for the measurement of value creation developed by the Stern Stewart and Company consultant group (Stern, 1985; Stern et al., 1995). Basically, the technique provides a way to compute the economic value created by the firm over a period of time, the key variable which should guide managerial decision making (Bromwich and Walker, 1998; Chen and Dodd, 1997).

The aim of this article is to investigate the relationship between Economic Value Added (EVA) and Return on Equity (ROE) during 2003- 2006.

In this study, EVA was dependent variable and ROE was independent variable. The information regarding 74 companies is collected from Tehran stock exchange (TSE) that includes the years from 2003 to 2006.

The multiple linear regression analysis results indicate which totally there is a meaningful relationship between economic value added (EVA) and Return on equity (ROE in Tehran stock exchange (TSE) during 2003–2006.also for each year, correlation analysis indicate There is no a meaningful correlation between economic value added (EVA) and Return on equity (ROE) in Tehran stock exchange (TSE) for 2004 and 2006 years, but There is a meaningful correlation between economic value added (EVA) and Return on equity (ROE) in Tehran stock exchange (TSE) for 2003 and 2005 years.