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EVA and Stock Returns in Emerging Markets: The Indian Evidence

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  • T G Saji

Abstract

This study seeks empirical evidence on the causal relations between Economic Value Added (EVA) and stock returns in the Indian context. Based on pooled time series, cross-sectional data on 70 well-performing companies in National Stock Exchange (NSE) over the economic slowdown period 2008-13, the study tests the hypothesis that EVA affects stock returns under linear regression framework, using alternative models. The results suggest that EVA, along with cost of capital, provides statistically significant information content and adds explanatory power in predicting stock returns in India. However, there exists some time lag before adjusting the impact of these measures on stock returns. The findings of this research corroborate the EVA reporting relevance within the context of an emerging capital market like India.

Suggested Citation

  • T G Saji, 2014. "EVA and Stock Returns in Emerging Markets: The Indian Evidence," The IUP Journal of Accounting Research and Audit Practices, IUP Publications, vol. 0(4), pages 25-35, October.
    • Handle: RePEc:icf:icfjar:v:13:y:2014:i:4:p:25-35
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    Cited by:

    1. Ashita Agrawal & Pitabas Mohanty & Navindra Kumar Totala, 2019. "Does EVA Beat ROA and ROE in Explaining the Stock Returns in Indian Scenario? An Evidence Using Mixed Effects Panel Data Regression Model," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 44(2), pages 103-134, May.

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