Analysis of shareholders’ economic value added of selected listed Banks in Ghana (2006-2010)

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.