Model-Report - For The Participants

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MODEL REPORT
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CERTIFICATE
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ACKNOWLEDGEMENTS
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ABSTRACT
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xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx
xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
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1. Introduction
Overview
This chapter presents the background and introduces the study
xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx
xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx
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xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx
1.1 Background & Problem Statement
(Chandra, 2004)outlines xxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxl (See Figure
Introduction-1) xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
1
xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx
(Rappaport, 1986)
Critique Defense
Figure Introduction-1 Critique and Defense of firm value maximization goal
Source: Chandra(2004). Fianancial Management: Theory and Practice. New Delhi:
Tata McGraw Hill.
xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx udge the performance of a publicly traded firm
(Damodaran, 2002)
xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx some(for
example (Brigham & Gapenski, 1997), (Bacidore, Boquist, Milbourn, & Thakor, 1997)) xxx
xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx .
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(Abowd, 1990) maintains,” xxxxxxxx xxxxxxxx xxxxxx xxxxx xxx xxxx xxxxx xxxxx xxxxx xxxx
xx xx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx
income like ROI / ROCE (see (Anand, Corporate Finance Practices in India: A Survey, 2002)
(Brigham & Gapenski, 1997) (Damodaran, 2002)) on xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx
xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx .
erformance (see (Anand, Sahay, & Saha, Balanced Score Card in Indian Companies, 2005)
(Bowen & Wallace, 1999) (Dierks & Patel, 1997) (Fisher, 1995), (Feltham, Isaac, Mbagwn, &
Vaidyanathan, 2004), (Harihar, 1999)).
xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx ( (Jensen & Murphy, 1990))
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( (Brossy & Balkcom, 1993) (Irala & Reddy, 2006) (Main, 1991), (Machuga, Pfeiffer, & Verma,
2002))
With this back ground a review of literature is carried out on t xxx xxxxx xxxx xxxx xxxx
xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx
1.2 Literature Review
The following is the review of literature related to the performance measures, their
relationship with firm value in general and VARIABLE-1 in particular
According to (Kramer & Pushner, 1997) xxxxxx xxxxxxxxxxxxxxx xxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxsic works of (Peasnell, 1981) (Mohanthy, 2006) (McGuire, Sundgren, &
Tom, 1988)
According to (Koller & Peacock, 2002) xxxxx xx x xx xxxxxxxxxxxxx xxxxxxxxxxxx
xxxxxxxxxxxxxxxxxt include (Lambert & Larker, 1987).
(Malhotra, 2001) found xxxxxxxxxxxxxxxxx x xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
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A study by (Pike, 1984)found t xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx
xxxx xxxxx xxxxxx xxxx xxx
(Machuga, Pfeiffer, & Verma, 2002) showe xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
Though (Malhotra, 2001), it d xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx
xxxx xxxxx xxxxxx xxxx xxx by (Brossy & Balkcom, 1993).
(Walbert, 1994) xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx
(Richardo, 1817) observed that xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx
xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx
xxxx xxxx xxxxx xxxxxx xxxx xxx
(Wallace, 1997) arg xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
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xxxxxx xxxx xxx .
(Abdeen & Haight, 2002) found xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx
(McGuire, Sundgren, & Tom, 1988) observed xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx.
(IMA, 1996) found xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx
(O'Byrne, 1999) xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx.
(Conley, 1995) xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
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xxxxxx xxxx xxx.
(Epstein & Young, 1998) observed xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx
(Luber, 1996) has xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx
(Venkatraman & Ramanujan, 1986) xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx
xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx
xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx .
(Baum, Sarver, & Strickland, 2004) xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx
(Bhatnagar & Shekhar, 2001)examined xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx
xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx
xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx Findings similar to (Bhatnagar & Shekhar, 2001)are
found in other studies
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(Chen & Dodd, 1997)xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx
xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx
xxxxx xxxxxx xxxx xxx
Need for the study
d xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
firms (see (Thackray, 1995), (Richardo, 1817))
(see (Olsen, 1996), (Peterson & Peterson, 1996) , (O'Byrne, 1996), , (Kramer & Pushner,
1997), (Biddle, Bowen, & Wallace, 1997) (Chen & Dodd, 1997) , (Bacidore, Boquist,
Milbourn, & Thakor, 1997), (Lehn & Makhija, 1997), (Wallace, 1997) , (Stark & Thomos,
1998) , (Dodd & Johns, 1999), (Farslo, Degel, & Denger, 2000), (Chen & Dodd, 2001),
(Kramer & Peters, 2001) , (Cordeiro & Kent, 2001), (Sandoval, 2001) , (Lovata, 2000/2001) ,
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(Cordeiro & Kent, 2001) , (Abdeen & Haight, 2002), (Machuga, Pfeiffer, & Verma, 2002), ,
(Baek & Kim, 2002) )
In India, there are numerous conceptual papers on VARIABLE-1 ( (Jain, 1994); (Krishna,
1996); (Rajeswar, 1997); (Ethiraj, 1998); (Lahiri, 1998); (Pattanayak & Mukherjee, 1998);
(Saksena, 1998); (Manoj, Garg, & Arora, 1999); (Bao & Bao, 1999); (Harihar, 1999);
(Ravishankar, 1999); (Singh, 1999); (Thenmozhie, 1999); (Kumar, 2000); (Parasuram, 2000);
(Thampy & Beheli, 2001); (Stern, 2001), (Bardia, 2002); (Mangala & Joura, 2002); (Irala,
2005); (Irala & Reddy, 2006)
However there are d xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx
xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx
xxxxx xxxxxx xxxx xxx (Banerjee, 1999), (Banerjee, 2000) (Bhatnagar & Shekhar, 2001),
(Malhotra, 2001), (Swain, Mishra, & Kumar, 2002), (Swain N. , Mishra, Jayasimha, &
Vijayalakshmi, 2002) , (Venkateshwarlu & Kumar, 2004) (Murty & Misra, 2004). All these
studies d xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx
xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx
xxxx xxx
xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx.
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The Objectives of the study
The objectives of the study are:
xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx To
examine the value creation patterns of Indian firms and ascertain whether there are
significant differences across industries, industry sectors, BSE listing groups and
geographical regions
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1.5 Research Design
1.5.1 Sample Selection
1.5.2 Data Sourcing
1.5.3 Data Analysis: Statistical Models & Tools
1.6 Scope of the Study
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1.7 Limitations of the Study
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1.8 Organisation of the Study
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rmance. However, VARIABLE-1 does not solve business problems: managers do (Gressle,
1997).
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2. Value Creation Patterns in Indian Firms
Overview
2.1. Introduction
xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxxto it
(Mangala & Joura, 2002)
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xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx
xxxcreator (Gandhok, Kulkarni, & Dwivedi, 2003).
2.2. Statistical Tools & Techniques

2.2.1. Descriptive Statistics
2.2.2. Cross Tabulations
2.2.3. Chi Square test of independence
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2.3. Value Creation across years
Table Value Creation Patterns in Indian Firms-1 presents the summary statistics across
years.
Year N Mean Std. Deviation
Overall MV 5520 458.17 1885.81

MVA 5520 260.95 1549.69
2001 MV 908 267.53 1721.11
MVA 922 371.63 1273.08
2006 MV 927 925.33 2672.66
MVA 927 689.94 2243.52
Table Value Creation Patterns in Indian Firms-1 Value
Creation across years
Figure Value Creation Patterns in Indian Firms-2 depicts d xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx (Sify, 2007)
Level Date Remarks

1000 July 25, For the first time, the Sensex had touched the four-digit figure from the time of
1990 its debut in 1986 with the base year as 1978-79 and an initial score of 100
15000 Jul 06, As buying in blue chip stocks gathered momentum, the benchmark BSE index
2007 Sensex scaled Mount 15k this afternoon. The landmark figure, which had proved
elusive yesterday, appeared a distant dream when the market opened on a
highly listless note this morning.
Figure Value Creation Patterns in Indian Firms-2 The journey of Sensex :1000-15000
Source: http://sify.com/finance/equity/fullstory.php?id=14320708&vsv=SHGTslot3
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Table Value Creation Patterns in Indian Firms-2 presentsd xxx xxxxx xxxx xxxx xxxx xxxxx
Year
Total
2001 2002 2003 2004 2005 2006
% within Year 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Table Value Creation Patterns in Indian Firms-2 Value Creation across years: Cross tabulation
Table Value Creation Patterns in Indian Firms-3 presentd xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx
xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
Value df Asymp. Sig. (2-sided)

Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear Association
N of Valid Cases
Table Value Creation Patterns in Indian Firms-3 Value Creation across years: Chi
square test
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2.4. Value Creation across Industries
Table Value Creation Patterns in Indian Firms-4 presents thd xxx xxxxx xxxx xxxx xxxx xxxxx
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Industry N Mean Std. Deviation
Overall
Automobile
Other
Table Value Creation Patterns in Indian Firms-4 Value Creation across Industries: descriptive
Statistics
Table Value Creation Patterns in Indian Firms-5 presents td xxx xxxxx xxxx xxxx xxxx xxxxx
Negative Value Positive Value

Industry Total
Added Added
Automobile Count
% within Industry
% within Industry
Transport Count
% within Industry
Other Count
% within Industry
Total Count
% within Industry
Table Value Creation Patterns in Indian Firms-5 Value Creation across Industries: cross
tabulation
Table Value Creation Patterns in Indian Firms-6 d xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx
xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx

Pearson Chi-Square
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Likelihood Ratio
N of Valid Cases
Table Value Creation Patterns in Indian Firms-6 Value Creation across Industries:
Chi square test
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2.5. Value Creation across Industry sectors
Table Value Creation Patterns in Indian Firms-7 presents d xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx)
Industry Sector N Mean Std. Deviation
Overall
Manufacturing
Services
Table Value Creation Patterns in Indian Firms-7 Value Creation across

Industry sectors: descriptive Statistics
Industry Type
Total
Manufacturing Services
Negative Value Count
Added % within Industry Type
Positive Value Count
Added % within Industry Type
Total Count
% within Industry Type
Table Value Creation Patterns in Indian Firms-8 Value Creation across Industry sectors: Cross
tabulation
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Pearson Chi-Square
Continuity Correction
Likelihood Ratio
N of Valid Cases
Table Value Creation Patterns in Indian Firms-9 Value Creation across Industry
sectors: Chi square test
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2.6. Value Creation across BSE listing groups
xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxs
BSE Listing Group N Mean Std. Deviation
Overall MV 5520 458.17 1885.81

MVA 5520 260.95 1549.69
A MV 655 2680.35 4646.60
MVA 246 -3.38 57.33
Z MV 50 137.94 577.62
MVA 50 92.45 450.02
Table Value Creation Patterns in Indian Firms-10 Value Creation across BSE
Listing groups: descriptive Statistics
Table Value Creation Patterns in Indian Firms-11 presents d xxx xxxxx xxxx xxxx xxxx
xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx
xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
BSE Listing Group

Total
A B1 B2 S T TS Z
Negative Count
Value % within BSE
Added Listing Group
Positive Count
Value % within BSE
Added Listing Group
Total Count
% within BSE
Listing Group
Table Value Creation Patterns in Indian Firms-11 Value Creation across BSE Listing groups: Cross
tabulation
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Table Value Creation Patterns in Indian Firms-12 presents the results of d xxx xxxxx xxxx
xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx

Pearson Chi-Square
Likelihood Ratio
N of Valid Cases
Table Value Creation Patterns in Indian Firms-12 Value Creation across BSE Listing
Groups: Chi square test
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2.7. Value Creation across Regions
Table Value Creation Patterns in Indian Firms-13 pred xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx
xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx
xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxxegion (Rs. 26.11 Cr.) records the lowest.
Region N Mean Std. Deviation
West
South
Other
Table Value Creation Patterns in Indian Firms-13 Value Creation across

regions: descriptive statistics
xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx
xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
Region
Total
North West South East Central Other
Count
% within Region
Count
% within Region
Total Count
% within Region 100.0% 100.0% 100.0%
Table Value Creation Patterns in Indian Firms-14 Value Creation across regions: cross tabulation
Table Value Creation Patterns in Indian Firms-15 presents the results of d xxx xxxxx xxxx
xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx
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Pearson Chi-Square
Likelihood Ratio
N of Valid Cases
Table Value Creation Patterns in Indian Firms-15 Value Creation across regions: Chi
square test
xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx
xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
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2.8. Chapter Summary
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3. Interrelationships among Performance
Measures
Overview
This xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
mary of the chapter

3.1.1. Descriptive Statistics
3.1.2. Correlation
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3.1.3. Factor Analysis
xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxxd
xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxxd xxx
xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx
3.2. Variable-1
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3.2.1. Descriptive Statistics of VARIABLE-1
Table Interrelationships among Performance Measures-16 present the descriptive statistics
of VARIABLE-1 across y xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxxd xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxxd xxx
Group Sub Group N Mean Std. deviation
Table Interrelationships among Performance Measures-16 VARIABLE-1:
3.2.2. Correlation of Variable-1 with other Variables
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xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxxd xx
3.3. Variable-2
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3.3.1. Descriptive Statistics of ANOPAT
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3.4. Variable-3
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3.4.1. Descriptive Statistics of variable-3
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3.5. Variable-4
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3.6. Variable-5
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3.7. Variable-6
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3.7.1. Descriptive Statistics of Variable-6
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42
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3.8. Variable-7
3.8.1. Descriptive Statistics of Variable-7
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45
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3.9. Variable-8
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3.10. Correlation structure among the performance

measures
Table Interrelationships among Performance Measures-24presents the pearsonian r for
each pair of performance measures

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1 2 3 4 5 6 7 8
1
2
3
4
5
6
7
8
Table Interrelationships among Performance Measures-24 Correlation Matrix
It may be observed that ANOPAT, VARIABLE-1 and OCF have good correlation among
themselves. ANOPAT and OCF have got the highest correlation (0.965) followed by ANOPAT
and VARIABLE-1 (0.612). OCF and VARIABLE-1 have got a correlation of 0.506. Except these,
there are no correlations worth mentioning.
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3.10.1. Results of Factor analysis
a. Communalities
Initial Extraction
Extraction Method: Principal Component Analysis

Table Interrelationships among Performance
Measures-25 Communalities
b. Total Variance Explained

Extraction Sums of Squared Rotation Sums of Squared
Initial Eigen Values
Compone Loadings Loadings
nt % of Cumula % of Cumula % of Cumula
Total Total Total
Variance tive % Variance tive % Variance tive %
1
2
3
4
5
6
7
8
Extraction Method: Principal Component Analysis.
Table Interrelationships among Performance Measures-26 Total variance Explained
c. Rotated Component Matrix
Component
1 2 3 4
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Component
Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.
Rotation converged in 4 iterations.
Table Interrelationships among Performance Measures-27 Rotated
Component Matrix
d. Component Plot in Rotated Space
1.0
kplp
.5
fcfanopat roce
Component 2 eva eps
ronw
0.0
-.5
1.0 1.0
.5 .5
0.0 0.0
-.5 -.5
Component 1 Component 3
Figure 41 Component Plot in Rotated Space
Xxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx x xx x xxxxxxxxxxxxxxxxxxx xxxxxx xxx
(Table Interrelationships among Performance Measures-27). It may be plot together and
EPS stand s apart.
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e. Scree Plot
Looking at the scree plot one may decide to go with 4 to 5 components. But The Kaiser rule
3.0
2.5
2.0
Eigen Value
1.5
1.0
.5
0.0
1 2 3 4 5 6 7 8
Component Number
Figure 42 Scree Plot - components and eigen values
is to drop all components with eigen values under 1.0. From Table Interrelationships among
Performance Measures-26 one may observe that four components have their eigen values
as more than one. So it may be optimal to have four components. This is in conformity with
the observations in Rotated component matrix (Table Interrelationships among
Performance Measures-27) and component plot in rotated space (Error: Reference source
not found)
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3.11. Chapter Summary
This chapter made an attempt to capture the level of and inter interrelationships among
the eight performance measures selected of this study.
A close observation of the descriptive statistics for the over all cross section of the data and
across industries, industry sectors, BSE listing groups and geographical regions reveled
some interesting facts
As reflected in their highest and lowest averages, VARIABLE-1, ANOPAT and OCF have lot of
similarities across industries, industry sectors, BSE listing groups and geographical regions.
Like wise RONW has similarities with ROCE and KP with LP while EPS stood out. These
initial signals in the descriptives were later conformed in the results of factor analysis that
there can be some grouping of these measures into some factors
Interestingly the VARIABLE-1, ANOPAT and OCF have their averages closely resembling the
market value and MVA averages across years, industry sectors, industries, BSE listing groups
and geographical regions. This kind of trend is not observed with any of the performance
measures. This is again an initial signal that these performance measures may prove to be
more relVariable-1nt value drivers
An examination of correlations among the performance measure revealed that only three
of them-VARIABLE-1, ANOPAT and OCF- have better correlations among themselves. Other
53
than these three there are no noticeable pair wise correlations. Among themselves
VARIABLE-1, ANOPAT and OCF have very strong pair wise correlations VARIABLE-1 &
ANOPAT (0.61); VARIABLE-1 & OCF (0.51); ANOPAT & OCF (0.96). However there were
some–very few though-pair wise correlations among the performance measures at the
industry and group levels.
Examination of correlation structure among the performance measures through factor
analysis revealed that the given performance measures may be identified with four factors.
The first factor has high loadings from three variables: ANOPAT, OCF and VARIABLE-1. Kp
and Lp are associated strongly with the second factor; RONW and ROCE with the third
factor. EPS stand apart and doesn’t have any association with the first three factors.
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4. Value Relevance of Performance
Measures
Overview
xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx
xxxx xxxxx xxxxxx xxxx xxxd xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxxd xxx

Squares (R2) as a gauge of value relVariable-1nce (See for example O'Byrne(1996); O'Byrne,
(1997); Dodd & Chen(1997); Lehn & Makhija(1997); Kramer & Pushner(1997); Chen &
Dodd(1997); Biddle, Bowen, & Wallace(1997); Banerjee(1999); Banerjee, (2000); Bhatnagar
55
& Shekhar(2001); Chen & Dodd(2001); Malhotra(2001); Kramer & Peters(2001); Swain,
Mishra, Jayasimha, & Vijayalakshmi(2002); Venkateshwarlu & Kumar(2004); Swain, Mishra,
& Kumar(2002); Feltham, Isaac, Mbagwn, & Vaidyanathan, (2004)). While all these studies
used Simple or Multiple regression, there was one study (Lovata, 2000/2001), which used
Logistic Regression
4.1.1. Elimination of Outliers
Elimination of outliers is very strongly recommended by O'Byrne(1999) and is done by most
of the studies in US (For example, Biddle, Bowen, & Wallace(1997)-8 SDs from mean; Chen
& Dodd(2001)-10 SDs form the mean; Kramer & Peters(2001)-beyond 95% confidence
interval; O'Byrne(1996)-Top & bottom 2%)
In none of the empirical studies in India (Banerjee(1999); Banerjee(2000); Bhatnagar &
Shekhar(2001); Malhotra(2001); Swain, Mishra, & Kumar(2002); Swain, Mishra, Jayasimha,
56
& Vijayalakshmi(2002); Venkateshwarlu & Kumar(2004); Murty & Misra(2004)) there is a
mention of exclusion of outliers.
4.1.2. Dependent Variable
sed as the dependent variable in the Simple and Multiple Regressions (See for example
Kramer & Pushner(1997); Kramer & Peters(2001); Banerjee(1999); Banerjee(2000);
Bhatnagar & Shekhar(2001); Swain , Mishra, Jayasimha, & Vijayalakshmi(2002);
Venkateshwarlu & Kumar(2004); Swain, Mishra, & Kumar(2002); (Lovata, 2000/2001))
While few studies like O'Byrne(1996) and Malhotra(2001)) used Market Value, few others
like Lehn & Makhija(1997); Chen & Dodd(1997); Biddle, Bowen, & Wallace(1997) and
Feltham, Isaac, Mbagwn, & Vaidyanathan(2004) used stock returns
4.1.3. Independent Variables
57
4.1.4. Regression Models
58
59
4.1.5. Results from the Regression Models
Regression results are organised into the following 4 sections
a. Significance of the regression model (ANOVA / F test)

b. Regression Model Summary
c. Significance of the beta Coefficients (t test)
d. Correlation matrix of independent variables with the dependent variable
a. Significance of the regression model (ANOVA / F test)

b. Regression Model Summary

60
c. Correlation matrix of independent variables with the dependent variable
d. Significance of the beta Coefficients (t test) and Regression Models

Tables indicating the significance levels of the bets coefficients and the prediction models
built there from are given in an appendix separately
61
4.2. Analysis-1 –Value Relevance
4.2.1. Significance of the regression model (ANOVA / F test)
Table Value Relevance of Performance Measures-28 presents the results of ANOVA (F test),
indicating whether the regression model is significant. xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx
xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxx xxxxx xxxx xxxx
xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxx
xxxxx xxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx
xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx
xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx
Sum of Mean
df F Sig.
Squares Square
Regression
Residual
Total
Table Value Relevance of Performance Measures-28 Significance of the
regression model (ANOVA / F test)
The model is significant at 1% level
4.2.2. Regression Model Summary
Table Value Relevance of Performance Measures-29 presents the xxx xxxxx xxxx xxxx xxxx
xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx
xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxxd xxx xxx xxxxx xxxx xxxx
62
xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx
xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxxd xxx
Adjusted R Std. Error of

R R Square
Square the Estimate
Table Value Relevance of Performance Measures-29

Regression Model Summary-Analysis-1

Sum of Mean
df F Sig.
Squares Square
Regression
Residual
Total
63

R R Square
Square the Estimate


64
Sum of Mean
df F Sig.
Squares Square
Regression
Residual
Total

R R Square
Square the Estimate

65
4.5. Analysis-4–Value Relevance
Sum of Mean
df F Sig.
Squares Square
Regression
Residual
Total
66

R R Square
Square the Estimate


Sum of Mean
df F Sig.
Squares Square
Regression
Residual
Total
67

R R Square
Square the Estimate


68
Sum of Mean
df F Sig.
Squares Square
Regression
Residual
Total

R R Square
Square the Estimate

69
Sum of Mean
df F Sig.
Squares Square
Regression
Residual
Total
70

R R Square
Square the Estimate


Sum of Mean
df F Sig.
Squares Square
Regression
Residual
Total
71

R R Square
Square the Estimate


72
Sum of Mean
df F Sig.
Squares Square
Regression
Residual
Total

R R Square
Square the Estimate

73
4.11. Analysis-10–Value Relevance
Sum of Mean
df F Sig.
Squares Square
Regression
Residual
Total
74

R R Square
Square the Estimate

75
5. Findings and Conclusions
Overview
Overview
xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxxxx xxxx xxxx
xxxx xxxxx xxxxxx xxxx xxxd xxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx
xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx xxx xxxxx xxxx xxxx xxxx xxxxx
xxxxxx xxxx xxx xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxxd xxx
5.1. Major findings of the study

The following are the major findings of the study
5.1.1. Objective-1
76
5.1.2. Objective-2
77
5.1.3. Objective-3
5.1.4. Objective-4
78
5.1.5. Objective-5
79
80
5.2. Conclusions
81
5.3. Suggestions for the Policy Makers
As a finale to the study, the researcher would like to postulate certain policy guide lines on
the choice of performance measures and value drivers:
Traditionally financial reporting has devoted much attention on accounting income so much
so that financial markets are drawn towards it in the process of determining the stock price
However, liberalization and integration of financial markets -in the last decade –resulted in
increased awareness of share holder wealth creation.
In order that firms succeed in creating wealth for its shareholders, they must effectively
utilize the capital. Those firms that under utilize the capital and hence can not the meet the
expectation of its share holders in providing them adequate return by maximizing its stock
price shall face serious consequences-either the existing shareholders migrate to other
firms; or raising additional capital becomes very difficult or worse a firm might become a
pray for take over
So the policy makers may better keep in mind that the capital is not cost free and in order
that they create value in every activity they do, they may have to earn enough return that
more than covers the cost of capital. Only when a company earns more than its cost of
capital, will it create value foe its shareholders. One way to ensure this is to use VARIABLE-1
as the corporate performance measure.

82
In order to improve VARIABLE-1 and whereby the value of the firm, it is important that a
firm dwells on those contributing to VARIABLE-1 and hence driving the value of the firm up.
The following section presents the main drivers of VARIABLE-1 ipsofacto the value of firm
along with certain general courses actions to improve them.
83
5.4. Directions for Further Research
84
Bibliography
85
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This chapter presents the background and introduces the study

1.1 Background & Problem Statement

(Chandra, 2004)outlines xxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxl (See Figure

Figure Introduction-1 Critique and Defense of firm value maximization goal

Source: Chandra(2004). Fianancial Management: Theory and Practice. New Delhi:

Tata McGraw Hill.

Vaidyanathan, 2004), (Harihar, 1999)).

1.2 Literature Review

relationship with firm value in general and VARIABLE-1 in particular

According to (Kramer & Pushner, 1997) xxxxxx xxxxxxxxxxxxxxx xxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxsic works of (Peasnell, 1981) (Mohanthy, 2006) (McGuire, Sundgren, &

According to (Koller & Peacock, 2002) xxxxx xx x xx xxxxxxxxxxxxx xxxxxxxxxxxx

xxxxxxxxxxxxxxxxxt include (Lambert & Larker, 1987).

xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx

xxxx xxxxx xxxxxx xxxx xxx

xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx

xxxx xxxxx xxxxxx xxxx xxx by (Brossy & Balkcom, 1993).

xxxxxx xxxx xxx

xxxx xxxx xxxxx xxxxxx xxxx xxx

xxxxxx xxxx xxx .

xxxx xxxx xxxxx xxxxxx xxxx xxx

xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx.

xxxxxx xxxx xxx

xxxxxx xxxx xxx.

xxxxxx xxxx xxx.

xxxx xxxx xxxxx xxxxxx xxxx xxx

xxxxxx xxxx xxx

xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx .

xxxx xxxx xxxxx xxxxxx xxxx xxx

found in other studies

xxxxx xxxxxx xxxx xxx

Need for the study

firms (see (Thackray, 1995), (Richardo, 1817))

(Baek & Kim, 2002) )

2005); (Irala & Reddy, 2006)

The Objectives of the study

The objectives of the study are:

1.5.1 Sample Selection

1.5.2 Data Sourcing

1.5.3 Data Analysis: Statistical Models & Tools

1.6 Scope of the Study

(Mangala & Joura, 2002)

xxxcreator (Gandhok, Kulkarni, & Dwivedi, 2003).

2.2. Statistical Tools & Techniques

2.2.2. Cross Tabulations

2.2.3. Chi Square test of independence

Year N Mean Std. Deviation

Overall MV 5520 458.17 1885.81

Level Date Remarks

% within Year 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Value df Asymp. Sig. (2-sided)

Negative Value Positive Value

xxxxx xxxx xxxx xxxx xxxxx xxxxxx xxxx xxx

Value df Asymp. Sig. (2-sided)

Industry Sector N Mean Std. Deviation

Table Value Creation Patterns in Indian Firms-7 Value Creation across

Value df Asymp. Sig. (2-sided)

BSE Listing Group N Mean Std. Deviation

Overall MV 5520 458.17 1885.81

BSE Listing Group

Value df Asymp. Sig. (2-sided)

Region N Mean Std. Deviation