Today, financial reporting has been criticized for low-quality and lack of relevance in todays information-rich environment. As a result, there is a general consensus that the traditional measures ought to be revised due to these shortcomings. One of the measures, That the companies, investors, academics bodies and accounting policy makers have been showing increasing interest to as a replacement for earnings and cash flows from operation, as proxies for traditional measures is Economic Value Added.

This study provides evidence that we hope might be of use to companies, Investors and accounting policy makers who might be interested in Economic Value Added or Residual Income as replacements for earnings and cash flows from operations as the key measures to firm performance. Our findings of relative information content test show no evidence of any superiority of residual income and economic value added over earnings and cash flows from operation. On the contrary, these finding have shown equal relative information content for all measures. Likewise, the findings of the test of Incremental information content has shown that the special components of residual income and economic value added provided insignificant incremental information content in comparison to special contents of earnings and cash flows from operation.