Does EVA detect the value creation? A study of corporate India
24 Pages Posted: 1 Sep 2012 Last revised: 3 Feb 2021
Date Written: August 31, 2008
Abstract
An appropriate measure of corporate performance is believed to be highly correlated to firm value on one hand and should be able to signal the extent of periodic wealth creation on the other.
Using a random sample of 1000 companies, this paper examines the power of select performance measures in discriminating the Positive and Negative Value creation of the companies
Examination of the discriminating power of the performance measures for the pooled cross section of data reveals that the EVA has better discrimination power - in predicting the positive Vs negative market value added- than other performance measures and hence it may be considered a better performance measure
Keywords: Performance measures, Discriminating power, Value creation, EVA
JEL Classification: G00, J33, L21, M40, M52
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