Abstract:
Economic Value Added [EVA] is a performance measures developed by Stern Steward & that attempt to
measure the true economic profit produced by a company. A metric is useful for investors who wish to determine how well a company has produced value for its investors. Market Value Added [MVA] as set by the market and expected future economic profits. MVA is a wealth metric. The main objective of this study is to find out the impact of Economic Value Added on Market Value Added in selected private banks in Sri Lanka. To attain this objective, distinctive methodologies which are consistent with the previous research studies have been used. Convenience sampling technique is used to draw the sample from the private banks. Such as Hatton National bank, Commercial bank, Sampath bank, Nations Trust bank, Development Finance Corporation of Ceylon and Seylan bank. Secondary data are collected for the study which consisted annual reports of said banks during the period of 2006-2012 (7 years). Operational hypotheses are formulated which have been tested using correlation and regression analysis. The results revealed that there is a significant relationship between EVA and MVA. In addition Economic Value Added [EVA] has a significant impact on Market Value Added [MVA]. This study is beneficial to the academicians, policymakers, practitioners and researchers to formulate the suitable policy in Sri Lanka as well as other similar countries.
