Maximizing shareholders' value is fast becoming the new corporate standard in India. Economic Value-added (EVA) is an appropriate performance measure which evaluates the manner in which managerial actions affect shareholders' value. EVA is a tool for identifying whether the management of the company has created wealth or destroyed it. This study empirically reviews the trend of EVA of Indian automobile companies. The results indicate that there is a significant increasing trend in EVA during the period of study and the firms in the automobile industry are moving towards the improvement of their firms' value.

An important goal of financial management is to maximize the wealth of the organization highest capital employees wealth and consequently enhance the value of the firm. Shareholder wealth is traditionally reflected by either standard accounting parameters (such as profits, earnings and cash flow from operations) or financial ratios (including earnings per share and the returns on assets, investment and equity).This financial information is used by managers, shareholders and other interested parties to assess their firm's current performance, and also by stakeholders to predict its future performance. The question that then arises is, whether these measures of corporate performance are linked to the expectation of the shareholders or not.

The problem with these performance measures is the lack of a proper benchmark for comparison. The shareholders require, at least, a minimum rate of return that the above mentioned performance measures ignore. Over the past several years, an alternative performance measure called Economic Value-added (EVA) has been gaining acceptance in the United States and has also been acknowledged by institutional firms as a credible performance measure. In order to overcome the limitations of accounting based measures of financial performance, Joel M Stern and G Bennett Stewart & Co., introduced a modified concept of economic profit in 1990, in the name of Economic Value-added (EVA) as a measure of business performance.

Economic Value-added: An Appropriate Performance Measure in the Indian Automobile Industry, shareholders,corporate standard, managerial actions, Chartered Accountants, World of Economic,Investment Managers, financial statements, financial reporting, computation, corporate managers, EVA technique, stock market analysis,corporate performance, financial indicators, Indian Economy.