Journal of CENTRUM Cathedra. Vol. 02, Issue 01

URI permanente para esta colecciónhttp://54.81.141.168/handle/123456789/194726

Tabla de Contenido
JCC Volume 2 - Issue 1 - 2009
  • Equity Market Risk Premium and Global Integration Johnson, Robert; Soenen, Luc; 1
  • Using Random Forests and Logistic Regression for Performance Prediction of Latin American ADRS and Banks Creamer, Germán G; 2
  • Entrepreneurs, Intuition, and Small-Business Performance Chaston, Ian; 3
  • Evaluation of Market Readiness of Medium and Small-Scale Nonprofit Organizations in Northern India: An Empirical Study Madan, Pankaj; 4
  • Understanding Employee Turnover Patterns in Mexican Maquiladoras Romero, Eric; Cruthirds, Kevin W; 5
  • Productivity Growth as The Predictor of Shareholders' Wealth Maximization: An Empirical Investigation Kumar, Mukesh; Charles, Dr Vincent; 6

    • Doctoral Research Proposal
  • Competitive Advantage of Operational and Dynamic Information Technology Capabilities Bullon, Luis A; 1
  • Managerial Capabilities in Peruvian Family Companies: An Exploratory Study Salomon, Jaime O; 2

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      Productivity Growth as The Predictor of Shareholders' Wealth Maximization: An Empirical Investigation
      (Pontificia Universidad Católica del Perú. CENTRUM, 2009) Kumar, Mukesh; Charles, Dr Vincent
      The economic value added (EVA), orginally developed by Stern Stewart & Company, is a relatively new financial tool that is being adopted successfully by many firms. However, evidence of EVA as a predictor of shareholders’ wealth is mixed. This paper empirically verifies the effect of productivity growth, a real missing link between EVA and a firm’s financial health, on shareholders’ wealth maximization. The study uses the firm-level data from the Indian food processing industry for the period 1993-94 to 2005-06 to measure and decompose the Malmquist productivity index into its different components, such as technological change, pure efficiency change and change in scale efficiency, by using the technique of data envelopment analysis (DEA). It further examines the linkage between different components of productivity change and market value added, an indicator of shareholders’ wealth maximization, by using fixed effect regression models. The results reveal that the negative growth in total factor productivity change is mainly due to technological regress on the one hand and increasing inefficiencies of the firms on the other hand. The scale efficiency change is found to be the only source of total factor productivity (TFP) change in the Indian food processing industry. As expected, there exists a positive relationship between the components of TFP change and the market value added (MVA). However, the technological change is found to be the only driving force of market value in the Indian food processing industry, indicating that the stock market does recognize the innovative activity undertaken by firms.