Does EVA detect the value creation? A study of corporate India

24 Pages Posted: 1 Sep 2012 Last revised: 3 Feb 2021

See all articles by Lokanandha Reddy Irala

Lokanandha Reddy Irala

School of Management Studies, University of Hyderabad

Raghunatha Reddy

Jawaharlal Nehru University

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

Suggested Citation

Irala, Lokanandha Reddy and Reddy, Raghunatha, Does EVA detect the value creation? A study of corporate India (August 31, 2008). Available at SSRN: https://ssrn.com/abstract=2139494 or http://dx.doi.org/10.2139/ssrn.2139494

Lokanandha Reddy Irala (Contact Author)

School of Management Studies, University of Hyderabad ( email )

Prof. CR Rao Marg
Gachibowli
Hyderabad, Telangana 500046
India
8247705022 (Phone)

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

Raghunatha Reddy

Jawaharlal Nehru University ( email )

Vasant Vihar
Jawaharlal Nehru University
Hyderabad, DE Delhi 500072
India

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