Intention to use eva in financial analysis of securities companies

Economic value added abbreviated as (EVA) is a quantitative technique is a quantitative technique measuring the value generated by a team of experts at Stern Stewart & Co . EVA provides managers with optimal financial decision-making tools, yet the adoption of EVA among companies in Vietnam remains limited. This paper aims to examine the factors influencing the intention to use EVA in financial analysis among securities companies. A survey was conducted on 30 securities companies, totaling 85 observations, targeting managerial positions, through selective sampling from January 2024 to March 2024. The article uses the SEM structural model on SPSS and AMOS 20 software to clarify factors affecting the intention to use EVA in financial analysis of securities companies in Vietnam. The results indicate that corporate strategy positively influences the adoption of EVA in financial analysis activities of securities companies. Recommendations include encouraging securities companies to incorporate EVA in their strategic planning and enhancing the financial expertise of CEOs and CPOs.


INTRODUCTION
Economic value added abbreviated as (EVA) is a quantitative technique that measures value creation developed by the team of experts (1,2,3,4,5,6,7,8) In terms of content, the method guides how to calculate the economic value created by businesses over a period of time, variables that provide managers in making management decisions such as optimal investment choices and encouraging them to take action. (22)Companies that adopt EVA after a long period of inefficiencies result in stable, long-term improvement in performance metrics.With investment activity variables, the use of EVA in financial analysis gives corporate managers motivation in investment activities, and can boldly use higher debt capital, especially EVA has a positive effect on cash flow and profitability of companies. (5)VA is utilized to evaluate managerial performance, and many large companies worldwide have implemented this tool with specific outcomes.While traditional measures such as profitability ratio on sales (ROS), return on assets ratio (ROA), return on equity ratio (ROE) determine financial performance.based on traditional ratios, EVA integrates net profit after tax with capital costs.This is relatively suitable for securities companies, as the capital used for their operations is often sourced from short-term debt, with relatively high capital usage costs.
In the modern, globally integrated economy, securities companies act as intermediaries in the stock market, contributing to its development.These companies are susceptible to various risk factors, and thus, they must ensure strong financial capabilities tied to sustainable growth and development.The financial condition of securities companies can partly reflect the health of the stock market, indicating resilience during crises or adverse market conditions.These aspects are clearly demonstrated in the financial reports of companies over the years.Therefore, financial analysis to determine the underlying profitability of securities companies is crucial.
Financial analysis in securities companies is the process of applying scientific methods to evaluate the financial status of securities firms.It helps managers gain insights into the current financial situation, identify limitations in financial health, and subsequently develop plans, forecasts, and investment decisions, as well as capital mobilization strategies aligned with business needs.The results of financial analysis are utilized by various stakeholders, including clients, investors, business partners, economic experts, and even governmental agencies and employees within the company.Different stakeholders utilize financial information for different purposes, leading to diverse decision-making objectives.Therefore, financial analysis tailored to each stakeholder group aims to meet their specific goals.
Economic Value Added (EVA) is a quantitative technique that has garnered attention and development from researchers worldwide.The majority of EVA-related studies focus on stocks, enterprise value, and generally agree that EVA is an effective metric for assessing business performance and managerial responsibility.Improving this metric could potentially represent most traditional financial indicators, offering more accurate economic insights for shareholders and investors.This metric is not only utilized in designing salary policies and incentives but also influences investment, business, and management decisions, shaping the perceptions and behaviors of managers and investors.However, there still exist differing views on both theoretical and practical aspects when applying EVA, particularly concerning calculation techniques and its applicability across various economic and financial sectors.To date, there remains ample room for further research into the comprehensive utilization of EVA across different economic and financial domains.
In recent years, showing that strategic corporate factors have influenced the use of EVA in financial analysis, studies include. (23,6,12)Meanwhile, the authors (25,17) argue that CEO characteristics and knowledge have an influence on EVA.Some studies suggest that objective factors require the company to use EVA. (24,13,1,4,16)However, the views or research results on the type of securities company are limited, there is no clear viewpoint, and there is no consensus.

Literature Review and Theoretical Framework Foundational Theories
Theory of Planned Behavior (Ajzen, 1991): This theory posits three determining factors: personal attitude towards performing a behavior, perceived social pressure to engage in the behavior (termed subjective norm), and perceived behavioral control or self-efficacy.Essentially, different behavioral intentions can be predicted with high accuracy from attitudes towards behavior, subjective norms, and perceived behavioral control.These factors have been shown to be related to a set of prominent behaviors, norms, and control regarding behavior.Expected value formulas are believed to only partially address these relationships.Past behavior serves as evidence to test the authenticity of behavior according to Ajzen (1991).
Disclosure theory (28) explains the behaviors associated with the disclosure of financial information due to the impact of the interest expense factor.Information disclosures related to investor attitudes, stock trading volumes, transparent information, investor behavior in the absence of information.Information that is unfavorable to the business is often concealed, such as information about leverage, profitability, and audit size (28)

Empirical studies
According to Finegan (1989), it is an excellent measurement technique, which is the basis for companies to Data and Metadata.2024; 3:419 2 select investment projects, design policies, and make appropriate financial decisions. (19)he basis for calculating EVA is: EVA = NOPAT -(TC x WACC) In which, NOPAT is Profit before interest and after tax, this is an index calculated based on profit after tax plus interest multiplied by one minus the corporate income tax rate.Meanwhile, TC is Investment Capital determined by average total assets.And finally WACC is the weighted average interest rate of capital according to the weight of capital sources.
In recent years, there have been numerous studies worldwide revolving around EVA.For instance, clarifying the concept and intricacies of EVA and its application principles, viewing EVA as a financial management system, strategy, EVA's advantages and disadvantages, or considering EVA as an ideal tool for budget optimization, strategic planning, as evidenced by studies conducted by (3,11) clarify the calculation techniques of EVA, determine the discount rate with the aim of bringing wage flows in different directions to the present time.In the case of equity, this discount rate is determined by the rate of return of the least risky investment opportunity.If borrowed funds are used, the discount rate is calculated as the interest rate on the loan.Studies that clarify this content are. (21,11)Studies of EVA application for management purposes vary at each point in the company's business cycle, such as. (20,9)To clarify the relationship between EVA and market value fluctuations.Empirical studies are investigated, surveyed and verified to determine how EVA has an impact on MVAs, especially for unlisted companies. (18,7)The relationship between EVA and stock returns, explains the important impact of EVA having an effect on stock prices in a linear frame such as. (15,10)The relationship between VBM and EVA valuebased management, used to value operating costs and provide important information for the formulation and promulgation of business policies such as (27) The influence of EVA relates to managerial behavior such as reward policy development, etc motivate them to raise and use capital effectively. (2)

Some notable studies on the impact of EVA adoption intention include
According to Lovata & Costigan (2002), companies facing higher representative agency costs tend to utilize EVA, encouraging shareholder value enhancement.Company strategy influences EVA adoption, with companies pursuing differentiation strategies and cost leaders being more inclined to use EVA. (14)Through a study sample of 115 companies identified as EVA adopters and a control group comprising 1 271 non-adopting companies, results indicate that EVA-utilizing companies typically have higher organizational ownership ratios and lower insider ownership ratios compared to non-adopting companies.Adjustments in EVA-centric data provide more suitable management solutions.
According to Bluszcz & Kijewska (2016), the essence of EVA technique is the level or amount of investment capital, weighted average cost of investment capital, return on capital as well as capital structure, cost of capital, profit, turnover capital.The above factors depend on the company's long-term financial strategy, guiding growth in scale or depth. (23)Based on this, the authors examine the causes and explain the operating results of companies.
According to Pavelková et al. (2018), can EVA be used to distinguish between different cycles of business activities such as the pre-crisis, during-crisis, and post-crisis periods of businesses?Based on group sensitivity data analysis techniques, there is evidence of different results for different companies.It can be said that EVA is the driving force with the most significant influence, while human resource costs have a negative influence during the research period (during, after and before the crisis.Analysis of efficiency scores shows that Businesses with crisis cycles are similar and close to the best businesses in other periods.EVA and pyramid analysis play an important role in revealing and creating dynamics value. (12)ubedi & Farazmand (2020) argue that using EVA as a performance evaluation metric encourages companies to enhance overall efficiency.Companies make cautious investment and operational decisions after applying EVA as their performance metric, thereby improving overall company performance.Based on a dataset of 2274 Chinese companies during the period from 2009-2010, different results regarding service provision are obtained. (6)

H1: Company strategy has a counterproductive effect on EVA adoption
According to Athanassakos (2007), the EVA method is widely used in Canada, the characteristics of companies used are large company size, young executives, highly educated and especially very knowledgeable in the financial and accounting system.The consideration of the relationship of several variables including stock price performance, the probability of using EVA and not using EVA through quantitative analysis of the Logitgis regression model and also qualitative analysis. (25)The results showed that companies that used EVA had higher stock performance than companies that did not use EVA.In addition, companies with higher stock market performance are more likely to use EVA.
According to Iazzolino, Laise & Migliano (2014), to clarify the relationship between intellectual value-added coefficient and EVA.A database of 2 596 companies operating in Northern Italy, from 6 different economic regions, was observed in 2011. (17)The results showed that EVA and the taxable value-added coefficient had no significant relationship.This is essential for companies that use improved EVA or adopt a balanced scorecard to evaluate a multi-criteria approach.
H2: Characteristics of the management level (CEO or CPO) have a positive impact on the use of EVA.H3: The financial knowledge of the management level (CEO or CPO) has a positive impact on the use of EVA.According to Berzakova, Bartosova & Kicova (2015), today's managers not only aim to increase value for shareholders but also need to enhance value for stakeholders.This shifts the focus of many companies' managers from the primary economic goal of profit maximization (ROA, ROI, PAT, EPS, etc.).However, these goals do not meet shareholders' requirements.EVA demonstrates superiority as a suitable means to determine the company's value creation reliability.Calculating EVA is straightforward and provides ample information for managers.To date, many improved versions of EVA have been introduced, showing application benefits such as MVA, CVA, SVA, and RONA. (24)ccording to Owusu-Antwi et al. (2015), in Ghana, the government identified the banking system as the backbone lever for overall economic development.However, the reality shows that bad debts caused significant losses in the banking system in the 1980s, leading to decreased value due to increased informal deposits in banks.The government began comprehensive reform of the national financial framework in 1988 to improve the financial capacity of the country's commercial banks.These policies have had an impact on improving the operating efficiency, solvency, profitability, and operational productivity of commercial banks.By 1990, the banking system's efficiency remained low, with a significant gap compared to private banks, evidenced by credit risks, loans, and limited capitalization.The authors investigated factors determining bank profits from 1988-2011 using EVA techniques.Results indicated that EVA served as the best measurement tool compared to standard accounting, revealing that ROA, CPI inflation did not significantly affect Ghanaian bank operations. (13)ccording to Zhang & Aboud (2019), factors such as credit risk, operational efficiency, innovation level have a positive relationship with banks' EVA, while capital management has a negative impact on EVA.Another finding is that the board size and independent directors are not related to bank EVA.Still, from the perspective of traditional operational efficiency evaluation indices, CEO compensation positively affects bank profitability. (1) According to Xu, Albitar & Li (2020), based on the study of data from 913 publicly listed enterprises in the Chinese stock market from 2007-2016 to examine the relationship between corporate finance and EVA.The results show evidence that the profit ratio of the financial channel has a counterproductive effect on EVA.The impact scope is moderate, and there are differences between industries, intensity, and scale. (4)ccording to Indriakati (2023), the goal is to use EVA to review the performance of listed companies in indonesia.Data was collected from 2017 to 2019.The results show the suitability of EVA for use in evaluating and matching the current state of companies' ongoing operations. (16)4: Subjective standards have a positive impact on EVA adoption.H5: Using EVA in financial analysis will have a positive impact on improving business results.The article uses the SEM structural model on SPSS and AMOS 20 software to clarify factors affecting the intention to use EVA in financial analysis of securities companies in Vietnam.Data were collected online from Data and Metadata.2024; 3:419 4 30 securities companies, with 85 observations involving management positions such as CEOs, CFOs, through selective sampling from January 2024 to March 2024.The tests were conducted using SPSS and AMOS 20 software. (26)he model takes the form (Figure 1): INTE = f(STAN, FKNO, CHA, CSSC); BPR = f(INTE).The variables in the SEM-PLS quantitative model are measured using a 5-level Likert scale (Likert, 1932), the scale is built by 5 levels, with number 1 describing completely disagree, number 2 disagree, number 3 is a neutral rating, number 4 agree, number 5 is completely agree.
Table 1 illustrates the characteristics of CEOs and CPOs of securities companies as young, highly educated individuals, with the majority holding university degrees, reflecting the practical reality.
The Vietnamese stock market is currently experiencing strong growth both in scale and depth, with a positive shift in market structure and an increasing variety of commodities.As a promising economic sector playing an increasingly important role in the economy, the securities industry faces a severe shortage of human resources, especially high-quality personnel.The demand for human resources still does not meet market needs.Therefore, there is a youthful workforce structure.However, young workers also have advantages such as keeping up with market requirements and being willing to accept global financial and accounting knowledge.
Based on theory, the paper constructs the following scale.
The model consists of 6 scales and 18 observed variables.The article tests the Cronbach alpha index.The result of analyzing the reliability of the scale is that the quality is good or better if the value of that scale has an alpha coefficient >0,6 or higher (less than 1) and a corrected item-total correlation coefficient.total correlation)>0,3, details table 3 below.

RESULTS
Table 3 indicates that the quality of the scales is good.For the Business Performance scale, the Cronbach's Alpha value is 0,811, and the Corrected Item-Total Correlation is greater than 0,621.For the Intention to Use EVA in Financial Analysis scale, the Cronbach's Alpha value is 0,901, and the Corrected Item-Total Correlation is greater than 0,734.For the Subjective Norm scale, the Cronbach's Alpha value is 0,845, and the Corrected Item-Total Correlation is greater than 0,650.For the Financial Knowledge of CEOs and CPOs scale, the Cronbach's Alpha value is 0,829, and the Corrected Item-Total Correlation is greater than 0,603.For the Characteristics of CEOs and CPOs scale, the Cronbach's Alpha value is 0,798, and the Corrected Item-Total Correlation is greater than 0,541.For the Company Strategy of Securities Companies scale, the Cronbach's Alpha value is 0,771, and the Corrected Item-Total Correlation is greater than 0,560.
Exploratory factor analysis.Due to the sample size of 85 being less than 100, the Absolute value below selection is 0,3.Table 4 shows that the Kaiser-Meyer-Olkin Measure of Sampling Adequacy is 0,704, which falls within the range of 0,5 < KMO < 1.The Bartlett's Test of Sphericity is 0,000, indicating that the data used for factor analysis is appropriate.According to the results in table 5, the variance extracted test yields a cumulative percentage of 76,6576 %, which is greater than 50 %.The eigenvalues of the factor group are greater than 1, indicating 6 factors.
The factor loading value of the observed variables is greater than 0,3; After checking the loading factors of the variables, the variables with loading factors greater than 0,3 are the 18 observed variables.EFA analysis results met the requirements.The results of CFA confirmatory factor analysis show that the value (Cmin/df) is 4,35, which is within the value of 5 or less, the TLI value is 0,929, which is greater than 0,9, the CFI value is 0,988, which is greater than 0,9.NFI 0.991 is greater than 0,9, RMSEA value is 0,042 less than 0,05.In conclusion, the integrated model is suitable for real data because it meets the testing criteria.
Figure 3 shows that the Chi-square value adjusted for degrees of freedom (Cmin/df) is 4,77, which is within a value of 5 or less, the TLI value is 0,928, which is greater than 0,9, and the CFI value is 0,925, which is greater than 0,9, NFI 0.911 is greater than 0,9, RMSEA value is 0,036 less than 0,05.In conclusion, the integrated model is suitable for real data because it meets the testing criteria.
Table 7 with the significance level of the estimation coefficients: p-value <= 0,05; confidence level >= 95 %, the factors included in the model are statistically significant, and the hypotheses are accepted.
Table 7 indicates that the variables (FKNO) Financial knowledge of CEOs, CPOs have a positive impact on the use of EVA, with statistical significance at P-value <= 0,05.The variable (CSSC) company strategy has a reverse impact on the use of EVA, with statistical significance at P-value <= 0,05.And the variable (INTE) using EVA in financial analysis will positively affect improving business results, with statistical significance at P-value <= 0,05.The remaining hypotheses have P-value > 0,05 and are rejected.Hypotheses H1, H3, H5 are all supported.Hypotheses H2, H4 are rejected.The results are consistent with studies of (23,12,6) that a company's business strategy will strongly determine the use of the EVA analysis technique.Besides, CEO knowledge has an influence on EVA consensus with studies. (24,13,1,4,16)

Policy Implications for Securities Company Managers
Firstly, securities companies need to recognize that EVA is essential for the future to replace traditional metrics.It is a reliable measure of company efficiency, recognized and supported by the community, and used as an internal control solution.The main advantage of EVA lies in its consideration of economic profit to understand the value created and distributed by the company in a specific period.EVA stands out from other metrics because it creates value on a specific basis.It helps securities companies resolve conflicts of interest between shareholders and managers.Managers often make decisions to increase their own benefits, while shareholders seek to increase assets.Using EVA to measure business efficiency can limit managers' ability to manipulate data and guide them to maximize the wealth of company shareholders.EVA's successful measure indicates the actual value created for shareholders, enabling investors to assess the true value of the company in a specific period.Pursuing value maximization for shareholders makes researching the application of EVA in evaluating performance essential and meaningful.
Based on the results of the SEM regression model, the author proposes solutions to help securities company managers enhance their intention to apply EVA in financial analysis as follows: Firstly, review the company's strategy to align with the short and long-term requirements of the securities market.EVA calculation techniques should be used to select strategies that meet the requirements, simplify calculations, and eliminate important subjective factors in selecting reasonable data.Additionally, securities companies need to research the application of EVA for the industry in line with business strategies.Expanding the scope of EVA through considering longer-term data requires calculating various factors related to long-term strategies and business plans.
Secondly, enhance the financial knowledge of CEOs and CPOs.Securities companies aim to develop rapidly in terms of quantity and quality, requiring CEOs not only to understand business but also to manage financial operations effectively.The financial efficiency of the enterprise affects asset pricing for shareholders.Maximizing asset value for shareholders is an important goal of financial management, so shareholders always expect an increase in stock value to achieve optimal investment efficiency.Initially, CEOs must recognize the role and apply EVA to the company, adjusting accounting data when applying EVA.EVA depends on three main factors: Profit, Capital investment, and the interest rate used on capital.Adjusting one of these factors or all of them simultaneously yields different EVA results.Not all indicators always satisfy the needs of the target, and there are limitations to each indicator that require adjustments to be suitable.The adjustment goal is to reduce the difference between accounting and economic perspectives, providing more appropriate measurement results from an economic perspective (considering the cost of capital).Additionally, narrowing the gap between cumulative basis-recorded data and cash basis-reflected data by adjusting the calculated results on a cash basis.
Furthermore, CEOs and CPOs should participate in short-term courses, professional seminars on EVA to enhance their knowledge and operationalize EVA in practice.

METHODSource.
Developed by the author based on theoretical foundations Figure 1.Research Model Data and Metadata.2024; 3:419 8

Table 1 .
Statistics of Survey Participants' Characteristics

Table 2 .
Description of scales, observations Source: developed by the author based on theoretical foundations.https://doi.org/10.56294/dm2024419

Table 3 .
Results of analyzing the quality of the scales

Table 4 .
Test the KMO index

Table 6 .
Component rotation matrix of the observed variables Confirmatory Factor Analysis and Partial Least Squares Structural Equation Modeling Analysis.The results of the confirmatory factor analysis and the estimated linear structural model are depicted in the figure below

Table 7 .
Results of Hypothesis Testing of the SEM-PLS Model