Research On Integrated Value Management Theory Based On EVA

As the opinion of Property Rights Theory, the maximization of shareholder value is the one and only objective of financial management of the company. So whether the expected rate of return is higher than capital costs of the company is the key base for decision-making. Because shareholder value creation can be come true when the expected rate of return is higher than capital costs of the company.Economic Value Added is the financial performance measure that comes closer than any other to capturing the true economic profit of an enterprise. EVA also is the performance measure most directly linked to the creation of shareholder wealth over time. So EVA is the most accurate measure of corporate performance and shareholder value creation over any given period.On the other hand, actually Integrated Value Management is one of approaches for Value Based Management which put shareholder value creation at the center of the company philosophy.Integrated Value Management is a all-sided management approach and system which consists of three main systems: a decision system, an incentive system and a communication system, and capital asset, human resources and communication are involved in the systems. Integrated Value Management based on EVA has a powerful tool for measure of corporate performance and shareholder value creation.The objective of this paper is to research the theory of Integrated Value Management based on EVA which develop a new approach for shareholder value creation.The paper is organized as follows.Section 1 begins with the controversy between Property Rights Theory and Stakeholders Theory, and then shows the concept, characteristics and purposes of Value Based ManagementSection 2 shows the concept and theory of EVA, theory of economics and theory of corporate finance involved, and shows the research about the relation between EVA and Stakeholders.Section 3 shows how to calculate EVA, make a number of adjustments to conventional earnings in order to eliminate accounting anomalies and bring them closer to true economic results and shows the research report about capital costs of the company and the department.Section 4 shows the research report about Integrated Value Management Theory based on EVA which consists of three main systems: the EVA-based Decision System that uses EVA as the basis for management decision on allocate company resources, the EVA-based Incentive System that uses EVA as the basis to assess organizational structures and staff, and the EVA-based Communication System that uses EVA as a common language to develop a common set of values both inside and outside the company.Section 5 shows the questions Integrated Value Management based on EVA meets with in putting the theory into practice, and seeks the solutions to the questions, and then studies the questions and solutions of Integrated Value Management based on EVA in China.