Value Relevance in Indian Automotive Industry

Abstract

This research article is an attempt to empirically examine the value relevance of selected accounting parameters of the Indian automotive industry which is represented by three distinct companies – Tata Motors, Maruti Suzuki and Motherson Sumi. The selected parameters include total revenue, EBITDA, earnings per share, cash flow and book value per share. The effect of changes of these selected parameters is measured on the three companies over a ten year period from 2007 through 2016. The period has been carefully chosen to encompass significant changes taking place all over the world and also the changes in the world of Indian accounting. The study is based on correlation analysis and a set of multiple regression equations with checks for goodness of fit, autocorrelation, and multi collinearity. The final outcome suggests that for the chosen three companies and for the automotive industry in general, Earnings per share seem to be the best determinant of their share price