A Study On Residual Income Model And The Application In Value-Based Management

China's New Enterprise Accounting Regulation 33 further emphasizes the relevance and authenticity of Accounting Information. In such circumstances, How to use the accounting information to assess the value of enterprises will become a significant issue.As residual income model based on the accrual accounting system, the notable feature is of the full use of accounting information. This paper, first, introduce the residual income model; Secondly, illuminate the positive impact of China's New Enterprise Accounting Regulation 33 to the application of residual income model; Then discuss the application of residual income model in China.In addition to valuation, residual income model can also serve as a tool for thinking in value-based management. Based on the idea of residual income and the value-driven factors, residual income model show three points in the guidance to value-based management, first, residual income model guide the management of the enterprises to focus on business activities, because the business activities of enterprises is the real source of value; second, guide the management of enterprises balanced growth profits and risks in order for effective decision-making; third, show clearly the point of day-to-day management.