Eva And Its Implementation In China Share Reform Conditions

With the economic development, traditional performance evaluation system derived from account system has shown its limitation. It is suspected by academic world and enterprises increasingly. A new appraise index, Economic Valued Add (EVA), which is developed by Stern-Stewart Corporation, emerges as the times require. EVA, or added economic value, deducts capital costing from profit before interest after tax. It can be used to value true profit of entity.Considering equity capital cost, EVA shows its superiority by calculating corporation's created value in performance evaluation. Now, EVA has been popular in Europe and America, and our scholar has begun to pay attention to it. But we have to realize that because china's capital market is still not mature, it is hard to provide an object and accurate evaluation for the public companies and investors with EVA method.We shall also recognize that it is only temporary for china's stock market being steps behind. Since the stock right (or equity shares) reform in 2005, public companies' performance has improved rapidly, resulting in greater confidence in A Stock Market. Is EVA evaluation method more suitable in this improved environment? This article is to study EVA's suitability comparing before and after the stock market reform, trying to find out the changes that stock market reform had brought to domestic capital market. It also compares with Western world EVA study, and tries to discover the distance between Chinese developing market and Western mature market. Through this study, recommendations will be made to improve Chinese domestic stock market.