The impact of EVA and traditional accounting performance measures on stock returns: Evidence from India

Abstract

The importance of stock returns and Economic Value-Added (EVA) have attracted various research scholars over the past several years. The present study is an analytical attempt to critically evaluate the relationship between stock returns and EVA. The study considers a sample of 50 companies listed on the National Stock Exchange (NSE) of India for the period of five years, i.e., 2012-2016. Along with EVA, other traditional measures analyzed include Return on Equity (ROE), Return on Asset (ROA), Dividend per Share (DPS) and Earnings per Share (EPS). Statistical techniques like Karl Pearson's correlation matrix, regression analysis using ordinary least square model and Granger causality test have been implemented to prove the results. The results indicate a positive relationship of stock returns with EVA and the traditional measures of performance measurement. But the study did not find any evidence indicating significant impact of these variables on the stock returns. Also, it was found that EVACE, ROA and ROE do Granger cause stock returns.