An Empirical Analysis of Mar Value Added and Economic Profit with Reference to Listed Public Sector Enterprises of India

Measuring performance of firms from the standpoint of shareholders is crucial, given the fact that shareholders are the ownersof the company and provide much needed risky-equity capital. Companies are required to augment shareholders’ wealth toindicate that they effectively and efficiently utilize owners’ money. Value based measures are primarily used to measure the shareholders’ wealth. This study aims at measuring the shareholders’ wealth by using measures like Market Value Added (MVA) and Economic Profit in the context of listed public sector enterprises of India. The study covers a period of four years ranging from 2012 to 2015. The study reveals that out of 20 companies, 11companies recorded statistically significantly positive MVA during the study period. On the contrary, only three companies recorded statistically significantly positive mean Economic Profit during the study period. The study also finds that MVA and Economic Profit are statistically significantlycorrelated. The results of the study provide insights into the shareholders’ wealth creation in the context of PSEs. It will helpthe policy makers in understanding the framework of MVA and Economic Profit while measuring the performance of these companies from the shareholder's perspective.