Eva In The Evaluation Of Performance Of Listed Companies In China

There are 1243 domestic companies including both A shares and B shares listed on Shanghai and Shenzhen stock exchange until may, 2003,the total market value of listing companies over 1400 billion RMB and overall amount of shares are 604 billions, which is occupy about 50% of GDP. Thus, security market has become the most important investing transaction place for Chinese investors. However, Chinese security market still exist some problems, such as, weak market restrict system, unfair competing-system, and low-effective supervise system, investors more like speculate rather than rational invest. It is call incomplete weak effective market. In this kind of security market, investors more concern and must consider how to estimate the real condition of business operation of listing company. Many consultant companies and investors carried out the profit per share, the ration of net capital profit as the standard of estimating the portfolio or listing company and the foundation of analysis the stock value of listing companies.Along with the development of financial theory, the point of view of the final objective of listing company is to achieve the Shareholder Value Maximization has been accepted by many economists, which require ratio and method of the estimating of portfolio must indicate correctly the companies create value for shareholders. A new estimating standard and method —Economic Value Added(EVA) become more popular recently. The theory of EVA appearing and developing, it provides the solution of the opportunity cost of capital of shares which is not concern by traditional profit standard, moreover, it provides a new direction of estimating of the portfolio of listing company.This paper focus on the problem of estimating of the portfolio of listing company and the most popular point of view of investment currently, based on the traditional method of estimating the portfolio of listing company, tries to use the theory of EVA to help investors to make the right invest decision. This study followed this main structure, firstly analysis and concludes the traditional method of estimating, and then introduces the theory of EVA, furthermore, the paper uses the case study to analysis the applicability of using the theory of EVA to estimate the portfolio of listing company from both theoretical aspectand practical aspect.In fact, Chinese investors always base on the traditional standard of portfolio to analysis the investing value of listing company. Recently, few Chinese security companies, research institutes begin to study the applicant of EVA, many papers about theory of EVA appeared on academic magazines. However, these papers only introduce the theory of EVA briefly and analysis the applicability of EVA financial management system does not use the theory of EVA to help investor to solve the problem of investing decision.Author believe that, according to this paper's conclusion, linked the theory of EVA with the problem of Chinese investor's decision, use the theory of EVA to estimate the value of Chinese listing companies. It is a great meaningful to help investors to have the correct belief of rational investment and impersonal estimate the market value of Chinese listing companies.