Document Type : Research Paper

Authors

• Iraj Noravesh
• Mehdi Heidari

Abstract

In order to examine information content of three performance measures of CVA, OP, OCF, we pose two questions as follows:
1. Does Cash Value Added (CVA) explain annual stock return variations better than Operating Profit (OP) and Operating Cash Flow (OCF)?
2. Does Cash Value Added (CVA) have information content more incrementally than Operating Profit (OP) and Operating Cash Flow (OCF)?
The time period and number of samples respectively is 1378-1382, 110 company in four industry: Nutrition, Chemical, Automobile and non­metal minerals. Current research hypothesis tested as follows: the hypothesis tested through regressed pooled time series, cross-sectionally for each industry and the selected firms’ totals, that is, computing correlation coefficient and determinant coefficient.
Current research results show:

By the except ion of Chemical and Automobile industries, the existence of significant relation   between cash value added and annual stock return in other industries and in level of the  selected  firms  totals verified.
By the exception of Chemical industry, the relative information content

of cash value added (CVA) in other industries, and in  level  of  the selected firms totals much than operating profit(OP) and operating cash flow(OCF) i.

By the exception of Chemical industry, the information content of cash value added (CVA) in other industries, and in level of the selected firms totals relative to operating profit (OP)  and  operating  cash  flow(OCF) was incremental.

Keywords

• Cash value added (CVA)
• Operating cash flow (OCF)
• Operating profit (OP)
• Annual Stock Return
• Relative information content
• Incremental information content