Research On EVA Evaluation And Enterprises’ Over-investment

State-owned key enterprises is the important pillar of the national economy, its smooth operation is a big event relates to the national economy and people’s livelihood. However, as the state-owned key enterprise getting bigger, its core competitiveness is not along with the scale enlargement of the ascending simultaneously, a series of problems such as repeated construction, blind diversification and not-prominent main business still exist in some enterprises. Its reason is associated with the appraisal of managers’ performance. Former appraisal of managers’ performance gives priority to ROE. In order to improve the profits, managers often have short-term investment behavior,which causes the low efficiency of state-owned assets investment. In order to ascend state-owned key enterprise’s managers’operation and management level, the state-owned assets supervision and administration commission revised "Business executives of the State-owned Key Enterprises performance evaluation provisional measures"on January 1,2010, introducing the EVA evaluation to the appraisal of state-owned key enterprises’ management.At present, the measure has implemented for four years. This article is based on this background, the related factors which affect the over investment as the breakthrough point, based on the current situation of the state holding listed company investment and the implementation of EVA, combined with over investment and related basic theory of EVA evaluation, selecting data from Shanghai and Shenzhen motherboard A-share state holding listed companies in 2006-2013. After the assessment of state-owned listed companies’investment level using Richardson residual measurement model, the author selects state-owned key listed companies’ over investment samples to conduct further research. The dependent variable is over investment level of state-owned key enterprises, the implement of EVA as the explained variable, selecting the free cash flow ratio, the company size, big shareholder control, financing constraints, company growth as the control variable, using the linear regression model to investigate whether the EVA evaluation will affect the over investment level of state-owned key enterprise. The research shows that the implementation of the EVA has significantly negative correlation with excessive investment, the implementation of the EVA can significantly inhibit the excessive investment behavior. Finally, aiming at the problems in this study, the author put forward the improvement suggestions and comments from different point of view.This article research not only has certain theoretical significance for the research on relationship between EVA and over investment, but also offers a new way to reduce the excessive investment. At the same time, this article also has some inevitable defects, including fail to take all influencing factors of overinvestment into account due to the the author’s personal ability and sample representativeness problems because of the economic crisis.