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


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

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

Abstract Views: 46  |  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