Economic Value Added

The evaluation of corporate social responsibility has gained significance over the past decade due to the importance of natural and environmental resources. Many studies have been conducted on corporate social responsibility and the presented related models, which add to the importance of this report. However, in addition to its significance, many researchers also believe that corporate social responsibility evaluation models lack the necessary efficiency due to different interpretations, lack of transparency, and abuse of some companies in order to deceive and commit fraud. Therefore, the aim of this research is to present a model to evaluate corporate social responsibility using value added, which can be a suitable criterion in evaluating the social responsibility of commercial entities. In the present study, first, a model was developed based on corporate social responsibility, and then, to test the model, social value added of Nano motor oil was studied as a case study. In this study, data was analyzed through pairwise comparison. The findings of the study conducted on the social value added of Nano motor-oil indicate economic efficiency of 40%, product social efficiency of 8%, and depicts a 38-times increase in social value added compared with its economic added value. Thus, Nano-engine oil producing companies are located on the corporate social responsible category and the corporate social responsibility in this product is on the third level (strong) that indicates the product’s efficiency in the community and can be a suitable incentive for all business organizations to pay more attention to their products’ environmental and social impacts.

Added over the period 2006-2018. We focused on different proxies of corporate governance indicators, such as the Directors' Effectiveness, the Transparency and the Disclosure, Responsibility. Basel Principles have been used to make corporate governance indicators and Stern & Stewart and Chew (1995) method have been used to make banking economic value added. We used the PCA method to choose important indicators. The results of PCA estimation identified ten important variables affecting banks' economic value added. Due to the importance of banks' age in creating economic value-added, banks are divided into two classes according to age. The GMM method is used to estimate the models. Eight models were designed to examine the impact of different corporate governance measures on the banking economic value added. The results indicated that corporate governance indicators were significant in explaining changes in the Iranian banking economic value added. The result also shows that according to the banks' age, the effectiveness of the board structure is greater than others. This illustrates the importance of board structure more than other criteria.

Economic Value Added, or EVA is one of the popular tools that bankers can use to measure the financial performance of their bank. EVA helps management to conduct internal goal-setting. The long-term goal is preferred than short-term implications. It measures the company’s financial performance based on the residual wealth calculated by deducting its cost of capital from its operating profit, adjusted for taxes on a cash basis. It helps to capture the real economic profit of a company. The main objective of this study is to examine the Iranian banks' financial performance based on EVA which is the modern concept introduced to evaluate the performance of banks. Data are collected for the study, which consisted annual reports of the banks from 2006 to 2017 (12 years). Private banks selected in this study were associated with increased non-performing loan to total loan, reduced capital adequacy, reduced profits and increased inefficiencies. All of these factors have led to reduction not only in the economic value of banks but also the negative EVA of selected banks. Banks are encouraged to identify unnecessary activities and reduce the cost of providing services to improve the economic value added of banks.