Shareholders wealth creation in select BSE 100 listed companies

Traditionally, a variety of measures are used to show how much value is created to the shareholders. However, not a single traditional performance measure explains to the fullest extent the variation in shareholder wealth. In the past decade, a sea of changes has been made in the performance and measurement criteria of corporate entities, from the conventional profit based measures like, Earnings per share(EPS), Return on Capital employed (ROCE), Return on Equity (ROE), Net operating profit tax (NOPAT) to the new value based performance like Market Value Added (MVA), Shareholder Value Added (SVA), Cash Flow Return on Investment (CFROI), Total Shareholders Return (TSR), and Economic Value Added (EVA) etc., Hence, the present part of analysis examines which measure has got a better predictive power relative to the wealth creation. For this purpose,10 year (2001–02 to 2010–11) average values of traditional accounting measures such as Return on Capital Employed (ROCE), Earnings Per Share (EPS), Profit After Tax (PAT) and Return on equity (ROE) EVA and Market Value Added (MVA) in selected BSE listed companies are analyzed with OLS regression model. The results concluded that regarding shareholder's wealth creation, the performance of all 32 companies average MVA was positive revealing that they have created wealth to their shareholders and the traditional measures display a greater ability to explain the market value, than EVA.