Impact of performance measurements against market value of shares in Indian banks: An empirical study specific to EVA, EPS, ROA, and ROE

This study empirically tests the comparative and incremental data collected on performance measures, namely, economic value added (EVA), earnings per share (EPS), return on assets (ROA), and return on equity (ROE). The effect of these measures on the market value represented by the share price of the three major Indian banks, were observed. The numerical data were sourced from various databases for the purpose of calculating the EVA and extracting the EPS, ROA, ROE, and market value represented by the share price of the three major banks in India for the years 2012 to 2017. Two null hypotheses were derived and tested using the Multiple Linear Regression method. Contradictory to the generalized statements reported, there was no significant relationship found between EVA and the market value represented by the share price. The results corroborate the fact that EPS is a major influential factor in the variance in the market value represented by the share price. This study proves to be stronger as the period covered is the period after the global financial crisis, where the economy moved to a state of relative stability. On the other hand, the study did not test the different models used to calculate EVA, which future research may investigate. Future research may also examine other performance measures in the model.

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