Shareholders’ Value Creation: An Empirical Study Of Selected Indian It Companies Listed On National Stock Exchange

Abstract

Severe competition, rapid technological change, wide volatility in real and financial markets etc., have increased the burden on managers to deliver ‘superior’ performance, and ‘value’ for their shareholders. The ultimate role of managers is often presented as ‘increasing shareholder value’. Although managers exist to create value for their owners, corporate managers do not always act to maximise shareholder value, because of perceived conflicts with other goals. Shareholder value does not necessarily conflict with good citizenship toward employees, customers, suppliers, the environment and the local community. Companies that respect those constituencies tend to outperform others, suggesting that value can be delivered to shareholders only if it is first delivered to other constituencies. This paper makes an attempt to know, which measures are beings used to create shareholders value in Indian IT companies. Various measures have been calculated with the help of financial data, i.e., DPS, EPS, ROE, ROA, EVA and MVA. Also, it has been examined whether there exits any relationship between different measures. Secondary method has been used to derive conclusion. Based on the result it is clear that most of the companies have positive EVA that means they are creating shareholders value. Also, there is difference between the mean values of all the measures of five companies.