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- Title
An Empirical Study on Economic Value-Added and Market Value-Added of Selected Indian FMCG Companies.
- Authors
Madhavi, E.; Prasad, M. S. V.
- Abstract
This study examines if the selected seven Indian companies from FMCG sector listed on National Stock Exchange (NSE) have created shareholder value in terms of Economic Value-Added (EVA) and Market Value-Added (MVA) during the five years from 2010 to 2014. EVA is a trademark of Stern Stewart & Co, who conceptualized the term. Their contention is that EVA has got better predictive power in analyzing the financial performance of a company than other traditional methods like ROIC, EPS, ROA, ROS and ROE. In the present study, data of seven companies--Britannia, Marico, Dabur, ITC, HUL, Emami and Godrej--is analyzed to test the same. MVA is taken as a proxy for determining the market value of the firms. Correlation and multiple regression are used to test the claim. The study supports Stern Stewart's claim that EVA is a better predictor of market value of the firms as compared to EPS and is successful in indicating stronger relationship and relevance to capital markets than other traditional measures.
- Subjects
VALUE added (Marketing); ECONOMIC models; FAST moving consumer goods; NATIONAL Stock Exchange of India Ltd.; STERN Stewart &; Co.
- Publication
IUP Journal of Accounting Research & Audit Practices, 2015, Vol 14, Issue 3, p49
- ISSN
0972-690X
- Publication type
Article