‘EVA’ As an Indicator of Shareholders’ Wealth Maximisation in Construction Industry: A Comparative Study of DLF and L & T

There has been a universal pressure on firms to create shareholder value; therefore, a suitable measure of corporate financial performance and incentive compensation plans that encourage managers to increase shareholder wealth is always stressed upon. One professedly recent innovation in the field of financial performance measurement is a trade-marked variant of residual income known as economic value added (EVA). This paper attempts to highlight the importance of EVA in valuing the financial performance of a company and its impact on shareholder value in terms of market returns. It attempts to analyse the EVA reporting practices of the Indian construction companies on comparative basis with respect to value creation for the shareholders.