Abstract:
Empirical research finds that shareholder value creation represented by Pablo Fernandez Model (PFM) and EVATM is a better proxy of corporate performance than traditional accounting measures such as NOPAT, RoA, RoC and NPAT on several parameters discussed. These models reflect the value created for the shareholders by using variables that are closer to market price. The value is added only when the final price is above the cost of capital, which is the driver of all the corporate activity even in India, which is good example of weak form of efficiency with a hint of semi-strong efficiency.
