Shareholder Value Creation Measures: An Empirical Analysis on Indian Pharmaceutical Sector

Investors' focus in investing with an organization is its ability to create a value. Shareholders' wealth maximization is one of the key objectives among the top financial managers and the shareholders' wealth can be measured by the returns from their investment. Measures based on return like EVA, MVA, SVA, CSV and SR were used as measures to estimate shareholder value. This paper discusses about different measures by considering Indian pharmaceutical sector with 77 listed companies and compute value based management measures, compare and analyze the trend for a period of nine years (2007–2015). The results indicate that most of the large scale companies in the sample are creating value for the shareholders in large amount. Even though medium and small scale companies have reported positive shareholder value, the value is negligible or less when compared to large scale companies. Incorporating these performance measures can improve the faith in the shareholder and also motivates the employees and financial managers in implementing the strategies in enhancing the shareholder value.