Policy Burden、Soft Budget Constraint And The Implementation Effect Of EVA On The Over-investment Problem

In order to alleviate the current situation of over-investment in the SOE, the SAC (State-owned Assets Supervision and Administration Commission) implemented the Economic Value Added (EVA) performance assessment and evaluation system in the central enterprises exhaustively. The main difference between the EVA evaluation system and the traditional assessment system is that considering the compensation of the equity cost and debt cost at the same time makes the interests of shareholders and managers tending to be consistent, thus could effectively alleviate the principal-agent problems and reduce the degree of over-investment in the SOE. The empirical evidences of existing literatures indicate that EVA evaluation mechanism can effectively inhibit the excessive investment phenomenon of SOE, however, in the economic transition period of our country, the background of the special system may influence the effectiveness of the EVA assessment managing the over-investment, especially the policy burdens and the SBC(soft budget constraint) problems of SOE both exacerbate the degree of over-investment in the SOE. Consequently, the paper mainly test how those two factors influent the investment efficiency.Based on the A shares of state-owned enterprises as the research sample, this paper compared the implementation effective of EVA in the enterprises bore the different policy mission and faced the different level of SBC respectively, and test the cross validation of these two factors in the robustness, in order to examine the implementation of the policy burden and SBC on the governance effective of over-investment by the EVA assessment. Through the empirical study, this paper found that the extent of the policy burdens and the level of the SBC could influence the governance effect of EVA on the over-investment of enterprise. For the enterprises bearing the lighter policy burden, the governance effect is more significant and the reverse is also true; for the enterprises facing the higher levels of the SBC, the governance effect is more significant and the reverse is also true. But when the enterprise face those two factors, Only when it bear lighter policy burdens and faced higher SBC level, the effect of the use of EVA is the most significant.Innovation of this study is to explore the effects of special institutional environment on the EVA management role:on the one hand, this paper enrich the research on EVA governance effects of excessive investment, especially in the current special period of economic transition in our country, this kind of study is limited. On the other hand, even there existing literatures analyzing the influence of policy burdens on the enterprise performance evaluation system, but those articles not targeted on the effect of the policy burdens on the EVA management. Again on the other hand, the research conclusion of this paper could offer some reference to the study of soft budget constraint. Therefore, in this paper enrich the theoretical research, at the same time, its core policy suggestion is to make the state-owned enterprises to gradually get rid of its policy task aiming to improve the effect of the implementation of EVA appraisal.