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The Relationship between Economic Value Added and Market Value Added: An Empirical Analysis in Indian Automobile Industry

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  • Ali M Ghanbari
  • V S More

Abstract

The performance measure, Economic Value Added (EVA) is being increasingly adopted by more and more firms and is beginning to appear in the mainstream finance textbooks. Despite such acceptance, not much empirical work has been done on the relationship between EVA and Market Value Added (MVA). This study empirically tests the strength of the relationship between EVA and MVA in Indian Automobile Companies for the period between 2001 and 2005. The results indicate that there is strong evidence to support Stern-Stewart’s claim that EVA is superior to the traditional performance measures, and it is the best internal measure of corporate success in adding value to shareholders’ investments.

Suggested Citation

  • Ali M Ghanbari & V S More, 2007. "The Relationship between Economic Value Added and Market Value Added: An Empirical Analysis in Indian Automobile Industry," The IUP Journal of Accounting Research and Audit Practices, IUP Publications, vol. 0(3), pages 7-22, July.
    • Handle: RePEc:icf:icfjar:v:06:y:2007:i:3:p:7-22
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    Cited by:

    1. Sliman S. Alsoboa, 2017. "The Influence of Economic Value Added and Return on Assets on Created Shareholders Value: A Comparative Study in Jordanian Public Industrial Firms," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(4), pages 63-78, April.
    2. Showkat Ahmad Busru & G. Shanmugasundaram & Shariq Ahmad Bhat, 2020. "Corporate Governance an Imperative for Stakeholders Protection: Evidence from Risk Management of Indian Listed Firms," Business Perspectives and Research, , vol. 8(2), pages 89-116, July.
    3. Burja Vasile, 2013. "Economic Value Added And Stakeholders Interests," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 512-522, December.

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