Abstract:
Rapid growth of investments in the market has led the “Shareholder Value
Creation” being one of the most important and popular concept all over the
world. Since the companies were highly attracted for creating shareholder
value, the concept has become a critical component. Traditional Accounting
Based Performance Measures were critiqued for reporting a low level
correlation with shareholder value creation. Thus this study examines the
relationship between Accounting Based Performance Measures and
Shareholder Value Creation for selected Beverage, Food and Tobacco
companies listed in Colombo Stock Exchange. Nineteen companies from the
sector were selected as the sample for the study. Audited annual reports for 6
years from 2010 to 2015 were analyzed to collect data needed for the study.
Market Value Added (MVA) was used as the proxy to Shareholder Value
Creation Measures and Return on Equity (ROE), Earnings per Share (EPS)
and Return on Assets were used as the Accounting Based Performance
Measures. Simple Regression and Multiple Regressions were used to test
specified four research objectives. Other than those methods Descriptive
Statistics and Correlation analysis have been done. The research findings
suggested that there was no strong significant relationship between
Accounting Based Performance Measures and Shareholder Value Creation. In
conclusion it is recommended to consider contemporary economic measures
when making an investment rather than only considering the Accounting
Based Performance Measures.
