Abstract:
The level of development and growth, Pakistan’s economy has demonstrated, increased the
tendency of cut throat competition among companies operating in Pakistan. This resulted in
the form of improvement in shareholder’s awareness regarding companies’ profitability
indicators causing the increased pressure of perpetually performing better.
One ofthe indicators assisting in company’s performance evaluation is Market Value Added
(MVA). This study is an endeavours to understand the behaviour of MVA against other
internal performance measuring tools such as Economic Value Added (EVA), Return on
Assets (ROA), Return on Equity (ROE), Return on Capital Employed (ROCE), Earnings per
Share (EPS), Debt Ratio, Assets Turnover, Rate of Return on Capital Employed, Rate of
Return on Sales and Sales Growth.
Study covers half of listed companies from Cement Sector of Pakistan. Literature related
with this study proved that these indicators’ behaviour differs in different economies of the
world. Outcomes unveil the relationships among said indicators as follow; R-Square between
MVA and rest ofthe other indicators lies (1.8% to 64%) that shows MVA is has got weak or
moderate correlation with other indicators except Economic Value Added (EVA) as MVA
and EVA has got strong correlation, R-Square = 64.99%.
T-Statistics has been found ranging between (2.544 to 14.1607) that shows internal
measuring tools has got significant impact on MVA, except in the case of ROE, ROCE, Total
Assets Turnover and Debt Ratio where T-Statistics is less than 2, shows no impact of these
indicators over MVA.
