The Relation Between Changes of Market Value Added with Economic Value Added and Accounting Net Profit

According to literature, value of an asset is equal to the net present value of future cash flows expected from that asset. Therefore, it appears that historical data would not dictate to determine the value of an asset. But, it is witnessed in the market that investors make their decisions based on the historical financial statements [2]. Meanwhile, Stewart [8] claims that economic value added, which is calculated using historical data, can precisely determine the market value added and, therefore, we should cease using other yardsticks such as accounting net profit. On this basis, first it was attempted to test this claim in the Tehran Stock Exchange Secandly, determine what is the relative degree of workability of this measure with the accounting net profit, which is a simple and traditional yardstick. The result indicates that in the Tehran Stock Exchange, both the economic value added, and the accounting net profit are weak and inefficient measures in determining the market value added.