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A Critical Assessment of Interrelationship Among Corporate Governance, Financial Performance, Refined Economic Value Added to Measure Firm Value and Return on Stock


The purpose of this study is to measure firm value (FV) and return on stock (RoS) by considering corporate governance (CG), financial performance (FP), and refined economic value added (REVA) combinedly and also identify the convergence among these three parameters. The GMM estimator’s method was applied on the dataset of Dhaka Stock Exchange listed firms during the period 2013 to 2018. The sample contains 310 firms with 1860 firm years. The study reveals that CG, FP, and REVA characteristics are significantly conjuncted with FV and RoS. Firms, regardless of size, age, and nature, adopting good CG within business management practice can significantly improve FP and continuously generate positive economic value for both firms and shareholders over the period, thus enhance FV and RoS. Moreover, firms confirming continuous growth of FV are able to provide positive RoS to shareholders. This study ensures necessary guidelines for both firms’ manager and investors, as managers will be encouraged to implement good CG within the firms and confirmed to maintain healthy FP and continues REVA growth for the firm. Investors can assess firm performance and future growth opportunities before taking any investment decision.

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Fig. 1


  1. Market value of assets consider according to the value of the assets is mentioned in the balance sheet during the consideration period and do a natural log of all firms’ assets, patterns of ownership (percentage of local and foreign holdings), business volume, based on NOPAT.

  2. RoS = [(P1 - P0)+D] /P0, where, P0 = beginning stock price of time t, P1 = ending stock price of time t-1, D = dividend of time t

  3. REVA = net income -kd(1-Tax)D - ke (E) = natural log (NOPATt - kd {(1-Tax) [Dm/Dm + Em] (D+E) } – ke {Em / Dm + Em] (D+E) }, where Dm equal D and Em equal E; as book value and market value of debt and equity should be equal. Bacidore et al. (1997) argue that positive REVA creates shareholders’ value at end of the period as financiers are looking at the market value of their investment and future return at the beginning of the investment period.


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I would like to express my full gratitude to my spouse Mrs. Mary Tod Biswas for her full support and encouragement to complete the research article. I am also expressing my great appreciation to my students of different courses; those who were collected trade data for their course works by following the instruction and submitted to me on regular basis. I would like to extent my thanks to the East West University authority to offer the working environment to complete the research work as well as all Librarians for their great efforts.

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Table 9 Variable’s measurement

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Dewri, L.V. A Critical Assessment of Interrelationship Among Corporate Governance, Financial Performance, Refined Economic Value Added to Measure Firm Value and Return on Stock. J Knowl Econ (2021).

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  • Firm value
  • Return on Stock
  • Corporate Governance
  • Financial Performance
  • Refined economic value-added