The Impact Of EVA Performance Evaluation On State-owned Key Enterprises’Over-investment Behavior. Evidence From China’s Publicly Listed Firms

During the "Eleventh Five-Year"(2006-2010), China fixed asset investment growth continued at more than23%, in2011and2012declined, it remained above20%. Same period, the growth rate of GDP is about10%of fixed asset investment as the most important factor in stimulating economic growth, accompanied by high growth rates of investment, the current management and the academic community are more concerned about over-investment, high-speed investment, especially under the particularly China’s investment environment, the overheat may occur.Many State-owned Key Enterprises the very important industry related to national economy and the people’s livelihood. Reform and development of State-owned Key Enterprises still exist some outstanding issues. Firstly, management needs improvement, expansion and management are not synchronized, the second, irrational allocation of resources is prominent, duplication exists between State-owned Key Enterprises, excessive competition and homogenization of developments within the enterprise. Some enterprises still have issues as scattered resources, not high leave of main business and not high efficiency of resource allocation etc. In order to enhance the level of managers, guide the State-owned Key Enterprises to further strengthen the main industry, improve capital efficiency and achieve sustainable development of central enterprises, the SASAC revised " Business executives of the State-owned Key Enterprises performance evaluation provisional measures "at the end of2009and formally implemented Economic Value Added assessment in all State-owned Key Enterprises since January1,2010.Currently, the central business executives third term has ended,"Business executives of the State-owned Key Enterprises performance evaluation provisional measures" has been implemented over three years, the paper is on this background and based on the listed companies holding data from2007to2012, learn from Richardson (2006) model to estimate the over-investment level. Then, this paper empirical examines the impact of the implementation of EVA on State-owned Key Enterprises’investment behavior. Research findings show that China’s State-owned Key Enterprises has over-investment behavior; EVA performance evaluation can significantly inhibit the State-owned Key Enterprises’ over-investment behavior.So far, empirical research of EVA performance evaluation impacting State-owned Key Enterprises’over-investment behavior is relatively few and previous research findings need further examination in china. Results of this study enrich the theoretical literature of EVA performance evaluation impacting State-owned Key Enterprises’ over-investment behavior. Meanwhile, conclusion for the above relevant departments to further implement the policies adopted or improved practical significance, in favor of EVA performance evaluation, implementation and promotion.