The Incremental Information Content of Net Value Added An Empirical study on Amman Stock Exchange

Abstract

The aim of this study is to examine the information content of net value added in regard to enterprise profitability and its market value. Moreover, the study attempts to examine whether net value added information has incremental information content above that of earnings figure and the enterprise book value. (40) Industrial and service companies listed in Amman Stock Exchange represent the study sample during the period 2001-2010.

Regression analysis is employed to examine the study's hypotheses. The study reached to the following results: 1- There is a significant and positive relationship between earnings figure of the current year and earnings figure of the next year. 2. Net value added does not have an incremental information content regarding future profitability above that of current profitability. 3. There is positive significant relationship between market value of common equity and book value of common equity. 4. The earnings figure provides incremental information content regarding market value above that of book value. 5. Net value added does not have an incremental information content regarding market value above that of book value and earnings figure.

Keywords: Net Value Added, return on equity, Information Content, Jordan.