Nowadays, Investors, creditors, and managers need reliable and updated index to measure the stockholders’ wealth.
Having used these indexes, investors can decide on selling or keeping their shares, and creditor can analyze the risk of their investment and security. In addition, managers will be able to measure the performance of their companies.
In order to evaluate the validity of this kind of indexes at Tehran’s stock exchange, this research intends to investigate the relation between “created shareholder value added” on one hand and operational cash flow, operational profit, and economic value on the other hand.
Results of this research show that in those listed companies at Tehran’s stock exchange, the Eva (Economic Value Added) index is more reliable to forecast the created shareholder value, it Also shows shareholders how much role or influence has management had in their added wealth.
Generally, this research shows that the traditional accounting indexes are inadequate and cannot satisfy the investment markets and shareholders requirements. EVA is an index that is more useful to assess the management in terms of maximizing shareholder’s wealth.