Market Value Added and Share Price Behaviour an Empirical Study of Bse Sensex Companies

NVESTORS, world over, are currently demanding more shareholder value than just high returns. Maximising shareholders value has always been the ultimate aim of every company. Investors are very keen in assessing the corporate financial performance that correlate with shareholders wealth particularly the market price of a share. Traditional performance measures like return on investment, earnings per share, etc., have been used as the most important measure of shareholder value creation. But in the recent years, value based measures which measure performance in terms of change in value have received a lot of attention. There are several value based measures such as Cash Flow Return on Investment (CFROI), Shareholder Value Added (SVA), Economic Value Added (EVA), Market Value Added (MVA) and Cash Value Added (CVA). This paper attempts to examine the relationship between share price and Market Value Added in relation to other performance measures like Return on Investment, Return of Net Worth and Earnings per share with particular reference to BSE Sensex companies.