Journal of Management Research

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Performance Appraisal with EVA, MVA and Other Performance Measures


Affiliations
1 Haryana School of Business, Guru Jambheshwar University of Sc. and Tech., Hisar (Haryana), India
     

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The present paper aims to analyze and evaluate the effects of Economic Value Added, Market Value Added and other performance variables on returns of banks in India. The empirical data for the study is drawn from a panel of 28 public and private sector banks for a ten year period of 2002-03 to 2011-12. Correlation and various Regression models have been applied to test the hypotheses of the present study. The results reveal that Economic Value Added is positively and significantly associated with return on equity and return on assets. Further, Market Value Added is found significantly positive to return on assets but positively insignificant to return on equity. It is also observed that NIM and NII are the two important performance variables of Indian banks which significantly influence the both returns i.e. ROA and ROE. A significant positive relationship of ROE with EVA and an insignificant positive association of ROE with MVA state that shareholders give more importance to economic value than the market value of banks in India.

Keywords

Economic Value Added, Market Value Added, Fixed Effect, Random Effect, Banking Sector, India.
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  • Performance Appraisal with EVA, MVA and Other Performance Measures

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Authors

Karampal Narwal
Haryana School of Business, Guru Jambheshwar University of Sc. and Tech., Hisar (Haryana), India
Shweta
Haryana School of Business, Guru Jambheshwar University of Sc. and Tech., Hisar (Haryana), India

Abstract


The present paper aims to analyze and evaluate the effects of Economic Value Added, Market Value Added and other performance variables on returns of banks in India. The empirical data for the study is drawn from a panel of 28 public and private sector banks for a ten year period of 2002-03 to 2011-12. Correlation and various Regression models have been applied to test the hypotheses of the present study. The results reveal that Economic Value Added is positively and significantly associated with return on equity and return on assets. Further, Market Value Added is found significantly positive to return on assets but positively insignificant to return on equity. It is also observed that NIM and NII are the two important performance variables of Indian banks which significantly influence the both returns i.e. ROA and ROE. A significant positive relationship of ROE with EVA and an insignificant positive association of ROE with MVA state that shareholders give more importance to economic value than the market value of banks in India.

Keywords


Economic Value Added, Market Value Added, Fixed Effect, Random Effect, Banking Sector, India.

References