Study On The Relativity Between EVA And State-owned Listed Enterprises

Value approach is an important part of and recent development of modern firm theory. This approach is based on the value creation and overall value of the firm. It emphasizes business strategy and value management, focuses on the business development, market positioning and cultivation of core assets and competence. Specifically, it involves optimal capital structure, profitability, managerial innovation, risk-diversification and competitive advantages, which are vital to the firm's overall value.Compared to traditional index of the value of firm, (such as EPS, ROE ) ,EVA includes more information as regard to growth, capital cost, which can surely influence the capital structure of the firm. As a result, EVA has more explain power on the shaping of a firm's capital structure.In comparison to the traditional financial measures, EVA is based on view of residual wealth. It focuses on shareholder wealth, linking to the idea of real economy. By taking all capital costs into account, including the cost of equity, EVA overcomes the flaws of both traditional financial metrics and traditional incentive compensation system. It helps enterprises rise above shortsighted behavior to emphasis much more on sustainable development. EVA offers a meaningful way to resolve the problems existing in Chinese state-owned enterprises, such as to realize the primary financial objective, which is maximizing the wealth of shareholders, and a charge for using capital.To explain the relativity of capital structure and corporate value, this article use regression analysis tools through data analysis and setting up equations between EVA and capital structure. In the end of this article, author give his advices based on the new situation of SOE innovation.