Journal of Commerce and Accounting Research

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Economic Value Added and Stock Price of Firms in Indian Stock Market


Affiliations
1 Mizoram University, Department of Management, Aizawl, Mizoram, India
     

   Subscribe/Renew Journal


Developing competent knowledge about the market sphere and study of market trends of a stock price in relation to its value added gives the investors insight knowledge of stock market. Traditional accounting-based performance measure does not strictly portray the true value of a firm; hence, Economic Value Added (EVA) is currently gaining prominence in valuing the firm. EVA is an important tool of financial performance measurements of firms. The present paper attempts to analyze relationship between EVA and stock return of six different sectors comprising 17 companies listed in the NSE. The paper also compares the relationship of stock return with other variables such as Earnings per Share (EPS), Return on Assets (ROA), Return on Invest Capital (RoIC) and Return on Net Worth (RoNW) of the selected firms. Using the data of 10 years, i.e., 2007-08 to 2016-2017 of 17 companies listed in NSE 50 Index, the study has adopted single and multiple correlations to find out the correlation between the selected variables. The study found weak correlation among the variables under study.

Keywords

Stock Price, Stock Market, NSE, NIFTY, EVA, EPS, ROA, RoIC, RoNW, Correlation.
Subscription Login to verify subscription
User
Notifications
Font Size


  • Ahmad, I., Alam, S., & Yameen, M. (2019). A study of economic value added (EVA) & market value added (MVA) of Hindustan Corporation Limited. Global Journal of Economics and Business, 6(1), 225-237.

  • Akbar, M., Khan, M., & Ali, S. (2010). The relationship of EVA and stock returns: Empirical evidence from KSE. Business and Economic Research (BSE), 2(2), 1-5.

  • Amyalianthy, R., & Ritonga, E. (2016). The effect of economic value added and earnings per share to stock return. International Journal of Business and Management Invention, 5(2), 8-15.

  • Aravind, M., & Ramaya, K. (2015). Relationship between EVA (economic value added) and share price of selected companies in BSE-SENSEX - An empirical study. Journal of Commerce and Accounting Research, 4(3&4), 19-26.

  • Fernandez, P. (2001). A definition of shareholders value creation. Working Paper Series, IESE Business School.

  • Fouche, H. (2012). Measuring value added: The case of the South African banking sector. An Unpublished Thesis at the Potchefstroom Business School, Potchefstroom Campus of the North-West University.

  • Khan, M., Shah, N., & Rehman, A. (2013). The relationship between stock return and Economic value added (EVA): A review of KSE-100 Index. Retrieved from www.researchgate.net

  • Mamun, A., & Mansor, S. (2012). EVA as a superior performance measurement tools. Online Journal of Scientific Research, Modern Economy, 3(3), 310-318.

  • Maitah, M., Saleem, N., Malec, K., Boubaker, M., & Gouda, S. (2015). Economic value added and stock market development in Egypt. Asian Social Science, 11(3), 126-134.

  • Mustafa, Y. (2010). As a new cost and performance management tool: Economic value added (EVA). C.U. Sosyal Bilimber Enstitusu Dergisi, 19(1), 398-411.

  • Pataky, T. (2012). Is economic value added (EVA) the best way to assemble a portfolio. An Unpublished Thesis Submitted in the Department of College of Business and the Burnett Honors College, University of Central Florida, Orlando, Florida.

  • Sathya, M., & Ganapathy, S. (2018). Economic value added analysis in selected cement companies. Indian Journal of Research, 7(11), 89-90.

  • Sharma, A., & Kumar, S. (2012). EVA vs. conventional performance measurer - Empirical evidence from India. Annual Conference ASBBS Paper, Las Vegas, 19(1), 804-815.

  • Totowa, J. (2015). Exploring the correlation between selected performance measurement tools for individual investors in South Africa. An Unpublished Thesis Submitted at University of South Africa.

  • Withera, K. (2008). An analysis of the information content of economic value added (EVA) as a performance measure of Banks in Kenya. An Unpublished Research Project Report at School of Business, University of Nairobi.


Abstract Views: 427

PDF Views: 1




  • Economic Value Added and Stock Price of Firms in Indian Stock Market

Abstract Views: 427  |  PDF Views: 1

Authors

C. Vanlal Zawna
Mizoram University, Department of Management, Aizawl, Mizoram, India
R. K. Giridhari Singh
Mizoram University, Department of Management, Aizawl, Mizoram, India

Abstract


Developing competent knowledge about the market sphere and study of market trends of a stock price in relation to its value added gives the investors insight knowledge of stock market. Traditional accounting-based performance measure does not strictly portray the true value of a firm; hence, Economic Value Added (EVA) is currently gaining prominence in valuing the firm. EVA is an important tool of financial performance measurements of firms. The present paper attempts to analyze relationship between EVA and stock return of six different sectors comprising 17 companies listed in the NSE. The paper also compares the relationship of stock return with other variables such as Earnings per Share (EPS), Return on Assets (ROA), Return on Invest Capital (RoIC) and Return on Net Worth (RoNW) of the selected firms. Using the data of 10 years, i.e., 2007-08 to 2016-2017 of 17 companies listed in NSE 50 Index, the study has adopted single and multiple correlations to find out the correlation between the selected variables. The study found weak correlation among the variables under study.

Keywords


Stock Price, Stock Market, NSE, NIFTY, EVA, EPS, ROA, RoIC, RoNW, Correlation.

References