Evaluation Method Based On The Business Performance Of The Eva Theory And Operation Of The Incentive System

Since the economic reforms and open-door polices began to put in practice in china in the late 1970's, in order to improve the initiative of enterprises managers, China keeps on finding an effectively incentive and constraint mechanism, but still now she does not have any ideal one. So, finding and establishing an effective institution to coordinate the incentive and constraint mechanism becomes not only an essential issue of the modern firm theory but also an important and urgent task in the future reform of Chinese enterprises and the development of Chinese economy.In order to find an effective institution to coordinate the incentive and constraint mechanism, the first thing we should do is to build an effective performance evaluation model for evaluating the manager's performance objectively and scientifically. So, at first, the paper begins with an introduction and analyzes the theory of EVA (Economic Value Added) performance evaluation model. Then, this paper studies how to use EVA theory into China. At last, the paper gives an example to show how to calculate an enterprise's EVA value.After analyzing the EVA performance evaluation model, this paper studies several traditional incentive and constraint systems, which had been used in the world, including annual salary system, executive stock option system and management buy-out system. Furthermore, based on the EVA theory, this paper refers to some advanced measures used all over the world to stimulate managers to work hard, and after studying the specific situation of china, it establishes a dynamic model of incentive system. Finally, this paper also points out how to apply this system.Just as the social development can not maintain without human beings' hard work, the development of enterprises can not maintain without managers' hard work. I believe that with the spread and application of better managers' performance evaluation model and incentive system, Chinese enterprise managers' value will be showed. Enterprises will also develop rapidly.Xun Yang (MBA) Directed by:...