Corporate Performance Measures in India: An Empirical Analysis

Irala, Lokanandha Reddy

doi:10.2139/ssrn.964375

Cited by 10 publications

(14 citation statements)

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“…Our results regarding the relative information content test are consistent with the majority of international studies such as Chen and Dodd (1997), Biddle et al (1998), Worthington and West (2001), Peixoto (2002), DeWet (2005), Ismail (2006, Kim (2006), Kyriazis and Anastassis (2007), Vijayakumar and Manor Selvi (2007), Visaltanachoti et al (2008) and Maditinos et al (2009), but are also different from many studies (e.g. Irala, 2007;Sunitha, 2008;Taufik et al, 2008). Sunitha (2008) applied Biddle et al's (1998) methodology to study the relative and incremental information of Indian banks, and suggested that the information content of EVA was higher and could explain shareholder value creation better than traditional measures.…”

Section: Results Of Regression Analysissupporting

confidence: 90%

“…Sunitha (2008) applied Biddle et al's (1998) methodology to study the relative and incremental information of Indian banks, and suggested that the information content of EVA was higher and could explain shareholder value creation better than traditional measures. Similarly, Irala (2007) and Taufik et al (2008) also established the superiority of EVA over traditional measures in their respective studies. The difference in the results of these studies and our study can be attributed to differences in the time period, the variables used in the study, and the methodology applied.…”

Section: Results Of Regression Analysismentioning

confidence: 84%

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Further evidence on relative and incremental information content of EVA and traditional performance measures from select Indian companies

Kumar

Sharma

2011

Journal of Financial Reporting and Accounting

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Purpose -The main objective of this study is to examine the claim of economic value added (EVA) proponents about its superiority as a financial performance measure compared to five traditional performance measures, i.e. net operating profit after tax (NOPAT), cash flow from operations (OCF), earnings per share (EPS), return on capital employed (ROCE) and return on equity (ROE) in Indian manufacturing sector, and simultaneously provide its empirical evidences. To achieve this, relative and incremental information content of various performance measures and their relationship with market value added (MVA) is tested and examined. Design/methodology/approach -Principal component analysis (PCA) is one of the important multivariate methods utilized in business research for data reduction, latent variable modeling, multicollinearity resolution, etc. The present sample consists of 608 firm-year observations from the Indian manufacturing sector for the period 2000-2007. Firstly, principal component analysis (PCA) is employed to determine the important variables that explain market value. Secondly, alongside PCA, multiple regression models (OLS) are used to examine the relative and incremental information content of EVA and traditional performance measures. Findings -These results about PCA reveal that variables like NOPAT, OCF, ROE, ROCE and EVA have maximum influence on the market value (MVA) of the sample companies, whereas EPS has a negative loading, so, EPS is discarded for further analysis. Further, the PCA loading matrix reveals that NOPAT, OCF, ROE and ROCE outscore EVA. The regression results regarding the relative information content test reveal that NOAPT and OCF outperform EVA in explaining the market value of Indian companies. The incremental information content test shows that EVA makes a marginal contribution to information content beyond NOPAT, OCF, ROCE and ROE. Overall, these empirical results about Indian companies do not support the Stern Stewart hypothesis that EVA is superior to traditional accounting-based measures in association with market value of the firm. Originality/value -The study concludes that along with financial variables, other non-financial variables such as employees, product quality, etc., should be considered in order to capture the unexplained variation in the market value of Indian companies.

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Section: Results Of Regression Analysissupporting

confidence: 90%

Section: Results Of Regression Analysismentioning

confidence: 84%

Further evidence on relative and incremental information content of EVA and traditional performance measures from select Indian companies

Kumar

Sharma

2011

Journal of Financial Reporting and Accounting

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“…Jika nilai perusahaan meningkat, maka hal ini dapat menjadi daya tarik bagi para investor untuk berinvestasi pada perusahaan tersebut (Abdullah, 2003:142) Hasil penelitian terdahulu yang dilakukan Ismail (2011) menyatakan bahwa EVA merupakan penilaian terhadap kinerja keuangan perusahaan, maka dengan semakin tinggi EVA yang diperoleh pada suatu perusahaan akan memberikan dampak yang positif terhadap penciptaan nilai tambah dan meningkatkan nilai perusahaan. Hal ini sejalan dengan penelitian yang dilakukan oleh Dewanto (2005) dan Hidayat (2008), Irala (2007), Misra & Kanwal (2007) dan Sharma & Kumar (2010) menunjukkan pengaruh positif antara EVA terhadap nilai perusahaan. Hasil penelitian yang berbeda dilakukan oleh Lee & Kim (2009), Taufik dkk.…”

Section: Pendahuluanunclassified

Pengaruh Economic Value Added, Debt to Equity Ratio Dan Komposisi Komisaris Independen Terhadap Nilai Perusahaan

Karmawan

Badjra

2019

EJMUNUD

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Nilai perusahaan adalah nilai jual dari suatu perusahaan yang mencerminkan prospek perusahaan tersebut di masa mendatang. Rasio yang digunakan sebagai indikator dalam pengukuran nilai perusahaan dalam penelitian ini adalah price to book value (PBV). Tujuan dari penelitian ini adalah untuk menganalisis pengaruh economic value added (EVA). Debt to equity ratio (DER) serta komposisi komisaris independen terhadap nilai perusahaan pada perusahaan konstruksi yang terdaftar di Bursa Efek Indonesia (BEI) periode 2014-2017. Penelitian ini mengunakan metode purposive sampling dengan jumlah sampel sebanyak 9 perusahaan. Metode yang digunakan dalam penelitian ini adalah observasi non partisipan dengan teknik analisis regresi linear berganda. Hasil penelitian menunjukkan bahwa EVA berpengaruh positif dan tidak signifikan terhadap nilai perusahaan, DER berpengaruh positif dan signifikan terhadap nilai perusahaan, komposisi komisaris independen berpengaruh positif dan tidak signifikan terhadap nilai perusahaan. Kata kunci : nilai perusahaan, economic value added, debt to equity ratio, komisaris independen

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“…Sesil and Kroumova [10] suggest return on assets (ROA) to evaluate firm performance. Irala [5] recommends that return on equities (ROE) may not show managers' effectiveness, while the economic value-added (EVA) is the better predictor of market value comparing to other accounting measures.…”

Section: Icoa Conference Proceedingsmentioning

confidence: 99%

Financial Performance in Thai Food Industry

Boonvorachote

Sakulveeraphan

2018

KLS

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This paper aims to rank priority on companies’ performance improvement for Thai medium- and large-sized food industry: cost-efficiency seeking and value-added creation. Listed (large-sized) companies of Thai food industry show better performance than non-listed (medium-sized) companies in every measurement dimension, for examples, larger company sizes, higher profitability and lower costs of capitals. In short run, Thai non-listed food companies should aim for seeking cost-efficiency from production and financial cost reduction including foreign exchange risk due to their main sales volumes relying on export market. To enhance companies’ value for Thai listed food companies, companies’ economic value-added increases by fixed asset turnover, profit margin, sales growth, and time interest earned. On the other hand, Average costs of capitals (WACC) are negatively related to economic value-added. The food companies with high EVA will have lower costs of capitals. The listed companies achieve their value enhancing target quite satisfied, while non-listed companies should set this value-enhancing target for their long-run goal Keywords: Economic Value-Added; Cost Efficiency; Thai Food Industry

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Corporate Performance Measures in India: An Empirical Analysis

Cited by 10 publications

References 10 publications

Further evidence on relative and incremental information content of EVA and traditional performance measures from select Indian companies

Further evidence on relative and incremental information content of EVA and traditional performance measures from select Indian companies

Pengaruh Economic Value Added, Debt to Equity Ratio Dan Komposisi Komisaris Independen Terhadap Nilai Perusahaan

Financial Performance in Thai Food Industry

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