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The Effect of Traditional Performance Evaluation Criteria on the Market Value Added: Application on Informatics Index (XBLSM)

New Challenges for Future Sustainability and Wellbeing

ISBN: 978-1-80043-969-6, eISBN: 978-1-80043-968-9

Publication date: 21 May 2021

Abstract

Introduction: Data of companies in the Informatics index between 2008 and 2017 fiscal years were analyzed. In the analysis, the following ratios were used as traditional performance evaluation criteria: Return on assets, return on equity, earnings per share, price to earnings ratio, market to book value ratio, and return on sales rate. In addition, economic value added (EVA) was also used. The companies in the Informatics index are divided into sub-sectors according to by field of activity. These sub-sectors are software, communication, and hardware marketing.

Aim: To analyze the power of traditional performance evaluation methods to explain the market value added (MVA).

Method: Regression analysis and autocorrelation tests were used as research methods. These were done with IBM SPSS Statistics 25.

Findings: Models and rates that explain the MVA with the most meaningful results were calculated. These models and ratios are as follows: For the software sub-sector, a market to book value ratio was 77.8%; for the hardware marketing sub-sector, earnings per share was 65.4%; for the communication sub-sector, a market to book value ratio was 92.5%. Market to book value was the independent variable that describes the best MVA value of the two sub-sectors.

Originality of the Study: In this study, the average of the values of all companies in the BIST Informatics Index is not taken. By dividing into sub-sectors, value deterioration from the sector difference is prevented. It is stronger in terms of statistical science.

Implications: Researchers can look for and model the relationship between traditional evaluation criteria and EVA or other value-based evaluation criteria in the same index or other indices.

Keywords

Acknowledgements

Acknowledgement

The study was presented at IV. International Applied Social Sciences Congress 22nd–24th October 2020 and printed as a summary text.

Citation

Calayoğlu, I. (2021), "The Effect of Traditional Performance Evaluation Criteria on the Market Value Added: Application on Informatics Index (XBLSM)", Özen, E., Grima, S. and Gonzi, R.D. (Ed.) New Challenges for Future Sustainability and Wellbeing (Emerald Studies in Finance, Insurance, and Risk Management), Emerald Publishing Limited, Leeds, pp. 133-149. https://doi.org/10.1108/978-1-80043-968-920211008

Publisher

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Emerald Publishing Limited