Impacts Research Of EVA Performance Evaluation On Earnings Management

EVA is a performance appraisal and value management system put forward by Stern Stewart&CO. in1980s. Since then EVA management svstem has been used widely in the world, especially in some famous companies (Coca-Cola. SONY, Siemens).These facts have proved that EVA is scientific and effective. In2000Stern Stewart&CO.(China) brought EVA into China and published "List of wealth creation and destruction of listed companies in China" in2001, and then EVA caused extensive concern of domestic economists and great attention of SASAC. According to the phenomenon of false profit and real loss in central enterprises, SASAC has carried out EVA performance evaluation officially since2010. So to speak, the central enterprises of our country are experiencing an unprecedented EVA revolution. Yet the study of EVA in China is still at the exploratory stage, there’s no consistent conclusion of problems such as how to understand the examination of EVA correctly, how to adjust EVA accounting project, etc. So the impact of EVA on earnings management is a worthy topic to research especially SASAC links EVA with the performance of principal of central enterprises directly.Normative and empirical research methods were both applied in this study. The first part describes the meaning, background, context and innovation points of this paper and reviews the related literature. The second part defines the definition of EVA and earnings management does brief review of the contract theory, angency theory and value management. Based on the analysis the correlation of EVA performance valuation and earnings management, we raise the hypothesis and build the EVA-earnings management model in the third part. After introducing the current implementation of EVA performance evaluation, the fourth part selects155listed companies of central enterprises as our sample and uses linear analysis method to make an empirical analysis base on2008-2012financial data.. We find the following results:There is significant difference of the earnings management level between before and after the implementation of EVA. EVA performance may have a negative correlation with earnings management (DA). That shows that the present EVA performance evaluation of China’s SASAC has certain inhibition effect on earnings management behavior. Therefore, we put forward some proposals to improve EVA performance evaluation, points out the limitation and the study of this issue later in the future in the fifth part.