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Linkage between Market Value Added (MVA) and other Financial Variables: An Analysis in Indian Automobile Industry

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  • A. Vijayakumar

Abstract

The present article makes an attempt to find the relevance of Stern and Stewart's claim that MVA of the firm is largely positive associated with or driven by its EVA generating capacity in the Indian context. The study also portrays the temperament of association between MVA and other selected traditional financial variables like Earnings Per Share (EPS), Return on Capital Employed (ROCE), Net Operating Profit After Tax (NOPAT) and Return on Net Worth (RONW). The regression analysis has been carried out, and the succeeding outcomes that have been arrived revealed that NOPAT and RONW are the most significant variable with MVA followed by EVA, ROCE and EPS. In almost all cases, the positive relationship through correlation model has been established between the variables under reference. Thus, revealing the influence of this tool for rummaging the financial potency of Indian corporate comprising an industry and Indian industries comprising the particular sector may be measured as the need of the hour for all such companies that have not starting reporting their financial position in terms of EVA and MVA.

Suggested Citation

  • A. Vijayakumar, 2008. "Linkage between Market Value Added (MVA) and other Financial Variables: An Analysis in Indian Automobile Industry," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 33(4), pages 504-521, November.
    • Handle: RePEc:sae:manlab:v:33:y:2008:i:4:p:504-521
    DOI: 10.1177/0258042X0803300405
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    References listed on IDEAS

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    1. Stephen Riceman & Steven Cahan & Mohan Lal, 2002. "Do managers perform better under EVA bonus schemes?," European Accounting Review, Taylor & Francis Journals, vol. 11(3), pages 537-572.
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