Business Performance Evaluation And Incentive Mechanism Based On Eva Discussed

Since 1990s', the objective of financial management has developed and become stockholder-valve-maximization. But principle-agent theory tells us that managers will never contemplate or act in the way that stockholders do so long as the management and ownership of enterprises are separated. How to select a proper managers' performance measurement indicator and set up the incentive mechanism, so as to link up the incentive for managers with their performance, stimulate and restraint managers effectively, and reduce the conflicts between managers and stockholders, becomes a difficult problem.Firstly, this thesis makes a comparison between EVA and traditional managers' performance measurement indicators, and demonstrate that EVA is a relatively rational indicator. And then, this thesis combines EVA with traditional annual salary system and stock option system, and tries to search for a newer and more effective incentive mechanism. Finally, this thesis holds that only if China continues to perfect market economy and deepen enterprises' structural reform, can EVA based managers' performance measurement and incentive mechanism be extensively applied and can we get the utmost of them.