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

Ali M Ghanbari and V S More

The IUP Journal of Accounting Research and Audit Practices, 2007, vol. VI, issue 3, 7-22

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.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjar:v:06:y:2007:i:3:p:7-22

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