Paper Title :Empirical Comparison of Modern Approach With Traditional Approach For Creation of Shareholder Value in Indian Banking Sector

Author :Chitra Gounder

Article Citation :Chitra Gounder , (2017 ) " Empirical Comparison of Modern Approach With Traditional Approach For Creation of Shareholder Value in Indian Banking Sector " , International Journal of Management and Applied Science (IJMAS) , pp. 1-8, Volume-3,Issue-3

Abstract : This study investigates the importance of economic value added for the shareholders’ value maximization. Economic value added (EVA) is a value based performance measurement tool that helps to settle down the conflict issues between managers and shareholders. Using a sample of 40 Indian commercial listed Banks and using panel data with fixed effects during the period of 2001 to 2015, the findings of the study revealed that there is a positive and significant relationship between EVA and shareholder’s value maximization in case of public limited banks and overall Indian banks but in case of Private limited banks, DPS was found to have significant relationship with shareholder value. The more the managers produce EVA, the more shareholders’ wealth maximization will be created in public limited banks and in case of private banks DPS has to be focussed. The finding shows significant support for EVA and DPS, but it was found that EVA was not reported by the Banks and is not been used by investors for their investment decisions. Thus it is recommended for the managers to focus more attention to the criteria of EVA in evaluating shareholder’s value of banks. Key words- Shareholder value creation, EVA, DPS, ROE

Type : Research paper

Published : Volume-3,Issue-3

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