Effectiveness of Economic Value Added (EVA) and Conventional Performance Measures - Evidences from India Sharma Anil K., Kumar Satish | Biographical Note: Dr. Anil K. Sharma is Associate Professor in the Department of Management Studies, Indian Institute of Technology Roorkee, Roorkee. He has published several research papers in national and international journals of repute like International Journal of Economics and Finance, The Asian Economic Review, The Electricity Journal of Elsevier, Journal of Engineering, Construction and Architectural Management, Journal of Measuring Business Excellence, Journal of Financial Regulations and Compliance and Journal of Risk Finance of Emerald Publishing. He is a registered consultant to Asian Development Bank, Manila. He can be contacted at anilfdm@iitr.ernet.in |
| Satish Kumar is a Research Scholar in the Department of Management Studies, Indian Institute of Technology Roorkee, Roorkee. He can be contacted at satisddm@iitr.ernet.in. |
JEL CLASSIFICATION: G30, M41 Abstract In this paper we have tried to find out the effectiveness of EVA in selected Indian companies. During last decade, value added measures like EVA has gained popularity and companies around the world have started disclosing EVA figures in their financial statements, as a part of corporate social responsibility agenda. This is because of shifting corporate objective from profit maximization to value or wealth maximization. The paper examines whether selected companies are able to create value for their shareholders or not. For this, performance of selected companies has been analyzed using traditional performance measures such as ROCE, ROE and EPS alongwith value added measures called EVA. With the help of various statistical techniques like Regression, Trend analysis, Chi square and ANOVA, the present study tests the various hypotheses and reveals that except for few, majorities of the sample companies are able to continuously create value for their shareholders during the study period. Study provide that EVA is gaining popularity in India as important measures of firm performance and more companies should disclose EVA figures in their financial report so as to reveal correct financial position to the various stakeholders. Top Key words EVA, Return on Capital Employed (ROCE), Earning Per Share (EPS), Value Added Measures, Economic Capital. Top |