Do Traditional Accounting-based Performance Measures explain the Stock Returns better than EVA®?-Evidence from India

Measuring the corporate financial performance of the companies may be done with the help of traditional accounting-based performance measures but a plethora of research studies have also been done over the past three decades on the value-based measures, one of which prominently has been Economic Value Added (EVA®*). S&P BSE-200 Index companies have been considered for re-investigating and re-examining whether EVA associates better with the annual stock returns in Indian stock market and to judge whether it contributes relative information content beyond earnings in explaining the individual annual stock returns or not. The sample period considered for this study was 2007–08 to 2015–16. It was found that that Traditional Accounting-based Performance Measures show better association between with the Annual Stock Returns than EVA. I empirically study the relationship of the nine most popular traditional accounting-based performance measures and EVA with the annual stock returns in the Indian corporate scenario so as to provide a comprehensive analysis and interpretation of the value relevance of them in explaining the annual stock returns.