Study On The Relevance Of EVA And The Evaluation Of Listed Company

â… . BackgroundAlong with the development of economy and the change of financial goal, how to evaluate the real value of company has become the best concerned problem of investors, and it is significant for company's persistent development. The evaluation of company will help investors realize the financial goal. Some profit indexes like income of each section, net asset yield and net profit, for they can reflect in the financial report form simply and brightly, have acted as both the scaled standard of listed company and their work purpose for a long time. With the financial theory development, it's universal approved that the listed company's ultimate objective is to maximize the shareholders' value, and this request the indexes evaluating the value of company can reflect accurately the value of what company created for their shareholders. The value to stockholders created by the company each year equal to the earning takes out the cost. But traditional indexes have not taken out cost of capital stock, they can't estimate the real value created for their shareholders and can't value accurately the real value of listed company.Economic Value Added(for short EVA) was procreated based on overcoming traditional indexes' limitation, it takes out cost of capital stock, so it can be used to estimate the real value created for the shareholders. Though EVA has been popular used overseas, it stayed domestic only for theory and seldom used for company. The environment of domestic stock market is quite different with that of overseas, so we need to research whether EVA is fit for our country and how to use EVA to create our company' value. These are also the main contents of this thesis.â…¡. Content and IdeasThis thesis utilizes both normative study and empirical study to judge the relevance of EVA and the value of listed company in China's stock market. On the basis of the existed research literatures, this thesis takes the former 100 listed companies ranking by announced EVA from 2000 to 2002 three years as sample analysis, compares the relevance of EVA,accounting profit indexes and company value by empirical study. Results indicate that EVA has higher power explaining the value of listed companies than accounting profit indexes, but the study also shows that profit indexes still has high information content to explain the value of listed companies. So the thesis draws the advice to China that we can consider drawing both EVA and original accounting profit indexes to analyze and judge the value of listed companies.The first chapter of this thesis introduces how I decide to study this thesis, the purpose and significance of this thesis, and the methods for my study.The second chapter analyzes conceptions of EVA and company value theoretically. It introduces the original theory of EVA and different knowledge about company value in different period. Analyzing four cases, this chapter proved theoretically and practically the importance of EVA of company's real value.The third chapter utilizes empirical study to judge the relevance of EVA and the value of listed company in China's stock market, and proves EVA has higher power explaining the value of listed companies than accounting profit indexes.The fourth chapter is about conclusion and prospect. It also discuss how to help increase listed company's value using the theory of EVA.â…¢. ContributionThe innovation of this thesis lies in using some cases and through empirical study to analyze the relevance of EVA and the company's value, so the conclusion is more reliable and intelligible. In the course of empirical study, this thesis analyzes all-sided about the relevance and selects some particular indexes as variables. It discusses some approaches to increase company's real value, considers how to set up proper value management system for domestic listed companies.