PERFORMANCE EVALUATION AND SHAREHOLDERS VALUE MAXIMISATION THROUGH CFROI AND EVA: AN EMPIRICAL STUDY

Abstract: The major financial objective of a firm is the maximization of its shareholders'value. All management decisions and approaches should contribute to this objective. Management, though, faces the problem of determining what the effect of its actions would be on maximizing the shareholder's value. A firm must be able to identify an appropriate measure to analyse its financial performance which in turn reflects the shareholders' value, measures like EVA and CFROI serve this purpose. This paper aims at evaluating modern financial performance measures and maximizing shareholders value. This study has been done using a sample of 20 Indian cement companies quoted on the Indian Stock exchanges from 2006 to 2017. The study identifies that Shareholders value maximization measured by adjusted R2and found variations in stock markets explained by EVA and CFROI.The study concluded that there is a significant positive relationship between CFROI and EVA and great impact on stock market returns. Moreover, these two techniques are best financial performance measures for shareholders value. Key factors: EVA, CFROI, StMReand Regression analysis