Economic Value Added: Business Performance Measure of Shareholder Value

Management Accountant, Vol. 34, No. 5, pp. 351-356, May 1999

6 Pages Posted: 11 Jan 2005  

Manoj Anand

UIAMS, Panjab University, Chandigarh

Ajay Kumar Garg

University Business School, Panjab University

Asha Arora

DAV Sr. Secondary School

Abstract

The KPMG-BS study (1998) assessed top 100 Indian companies on EVA, sales, PAT, and MVA criterion. The survey has used the BS-100 list of companies using a composite index comprising sales, profitability, and compounded annual growth rate to cull out the top 100 Indian companies. The study covered the period 1996-97. The relationship between the ranks given in KPMG-BS(1998) study on four criterion variables for the 98 comapnies were studied by using Spearman's rank correlation coefficient. Though, the rank correlation between economic profit (EP) and PAT, EP and MVA are statistically significant, but it is not substantial. There is a high degree of correlation between PAT and MVA. Hence, EVA, REVA and MVA are better measure of business performance in terms of shareholder value creation and competitive advantage of firm.

Keywords: EVA, Performance Measure, India

JEL Classification: G31, M41

Suggested Citation

Anand, Manoj and Garg, Ajay Kumar and Arora, Asha, Economic Value Added: Business Performance Measure of Shareholder Value. Management Accountant, Vol. 34, No. 5, pp. 351-356, May 1999. Available at SSRN: https://ssrn.com/abstract=629245

Manoj Anand (Contact Author)

UIAMS, Panjab University, Chandigarh ( email )

Sector - 25
CHANDIGARH, UT 160014
India

Ajay Kumar Garg

University Business School, Panjab University ( email )

Chandigarh, 160 014
India
+91-9417161929 (Phone)

HOME PAGE: http://www.ubschandigarh.org

Asha Arora

DAV Sr. Secondary School ( email )

Sector 8
Chandigarh
India

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