Eva Performance Evaluation Index System

The key to reduce the agency costs is to design an effective contract, and the choice of performance measure is the basis. Traditional performance measure such as net profit, earning per share, return-on investment are severely criticized because of their disadvantage. A new method named Economic Value Added is based on accounting profit, but it considers the opportunity cost of equity and rectifies the distortions of important accounting message, and eliminates the disadvantage of traditional performance measure, it is helpful to reach the final target of company, maximize stockholder wealth, or maximize company value.This thesis establishes the EVA Performance Measurement Index System on the basis of the theory of Performance Measurement Index System. It emphasizes the effectiveness of the EVA Performance Measurement Index System by the example of Tsingtao Brewery Company Limited. It points out the problem exiting in the application of the EVA Performance Measurement Index System in Chinese company. And the suggestion is provided.