The Selection Of Excess Income Index In The Evaluation Of Enterprises

The inherent value, which is closely related to the cash flow t produced in the future, has to be considered in enterprise's essential. It's essential to define the cash flows exactly and analyze its influence facts in essential. Based on the existing evaluation models, this paper discussed the base of the evaluation theory, the definitions of cash flows and all kinds of models.The theoretical research part of the thesis primarily analyzed the relationship between alue, price and utility, and then stated the application of the above indexes in economic nvironment, and established the evaluating model of holding right and the mechanism for the limitation of rights'transaction price. Subsequently, free cash flows (FCF) and economic value added (EVA) were selected to denote as abnormal returns according to its definition. Comparing the above two indexes, we presented the reason to choose REVA as the abnormal returns index.The hypotheses were proposed in the empirical research.Our sample covers all the A stocks in Shanghai stock exchanges from year 2002 to 2006. The relationship between the abnormal returns indexes and the variation of shares market value was examined, in which the abnormal returns indexes include REVA and the net income added (ΔNI), the variation of stock price was comprised of the variation of the sum of circulation shares' market value and non-circulation shares' equity, the variation of circulation shares' market value, and the variation of shares' market value. First, we use correlation analysis to examine the relationship between abnormal returns indexes and the variation of shares market value; then use regression analysis to test the abnormal returns indexes' interpret power toward the the variation of shares market value.Considering it takes time for firms'value to affect the shares market value, we adopted the para-position analysis and outside analysis in the correlation and regression analysis.Through the above empirical analysis, we draw the following conclusion: (1) According to the correlation analysis, the correlation between theΔNI and the variation of stock price of the present year decreased annually, but appeared more correlative than the correlation between betweenΔNI and the variation of stock price of the last year. (2) According to the regression analysis, the interpret power of REVA toward the variation of firms'value of last year increased annually, while the interpret power ofΔNI toward the variation of firms'value of present year decreased annually, which stated that the listed companies'price has taken the cost of capital into accout gradually .Finally we made an analysis of the empirical and given explanation combining the stock market.