This study examines if the selected seven Indian companies from FMCG sector listed on National Stock Exchange (NSE) have created shareholder value in terms of Economic Value-Added (EVA) and Market Value-Added (MVA) during the five years from 2010 to 2014. EVA is a trademark of Stern Stewart & Co, who conceptualized the term. Their contention is that EVA has got better predictive power in analyzing the financial performance of a company than other traditional methods like ROIC, EPS, ROA, ROS and ROE. In the present study, data of seven companies—Britannia, Marico, Dabur, ITC, HUL, Emami and Godrej—is analyzed to test the same. MVA is taken as a proxy for determining the market value of the firms. Correlation and multiple regression are used to test the claim. The study supports Stern Stewart’s claim that EVA is a better predictor of market value of the firms as compared to EPS and is successful in indicating stronger relationship and relevance to capital markets than other traditional measures.

With the rapidly growing knowledge of capital markets among the Indian public, the Indian stock markets have seen a surge in their operations, through both National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India. The Indian public have moved into alternative investments apart from their primary thrust of investment in land (i.e., realty) and gold, which were very much prevalent earlier.

With the launch of commodities market in various segments, ordinary households have also started making investments in stocks, bonds and futures and options. Lot many small to medium-sized companies have also entered the trading floor to sell their produce through the commodities market. They too have started their transactions in futures and options market. In short, it can be said that there has been an exodus into alternative investments like equities and bonds which has boosted the Indian economy.

Accounting Research and Audit Practices, Empirical Study, Economic, Value-Added, Market Value-Added, Indian FMCG Companies.