Research On Application Of EVA Index In Our Central Enterprises

Recently, with the rapid development of the Chinese economy, our status in the global economic environment has been gradually fixed. The central enterprises as the main force of our economic construction have made the greatest contribution. On December 11 th of 2011, China officially became a member of WTO, and realized the comprehensive joint between the Chinese economy and global economy, initiated the mutual benefit and win-win result, and sought for the new pattern of the development. Meanwhile, the good operation performance of our central enterprises also has attracted more and more domestic and foreign investors. However, at the same time of the constant economic development of the central enterprises, the managers also realize that, if the enterprise only takes the traditional profit index as the basis when formulating the development strategy, the factors that are correspondingly necessary to be considered will be relatively single, and the strategic target is mainly focused on the benefit(return on equity) and maximization of profit, which will cause that the managers will blindly pursue the maximization of the profit and the minimization of the cost and expense, and even neglect whether it will give rise to great capital input and other problems so as to pursue the high income.To reduce the cost as much as possible, if the enterprise managers blindly reduce the research and development input required by the technology innovation, it will be unfavorable for the long-term sustainable development of the enterprise. As the shareholders of the central enterprises, the state-owned investors also hope that the input state-owned capital can realize hedging and appreciation, and the managers can create value for the enterprises. However, as the traditional financial index cannot actually present the value creating ability of the enterprise, it will be necessary to seek for new and objective indexes that can actually and comprehensively reflect the enterprise operation performance. EVA is a quite suitable one. Therefore, at the end of 2012, SASAC unveiled new economic value added assessment regulations and rules, and made further modification on the basis of the old assessment specification. It mainly promoted the proportion of EVA in the assessment of the central enterprises from 40% to 50%,and reduced the total profit weight to 20%. The non-recurring income is completely deducted after calculating the net operating profit after tax, which indicates that SASAC decides to correct some central enterprises’ behavior of blindly expanding, low property utilization rate, etc.Nowadays, EVA index has already been carried out in our domestic central enterprises for 5 years. This paper is aimed at analyzing the effect from the central enterprises to carry out EVA performance evaluation system through the theoretical analysis and empirical research, identifying the problems from the utilization process, discussing the solutions and seeking for the approaches about improving the application effect of EVA in the performance evaluation of the central enterprises.