Research On Contribution To Value Creation In State-owned Key Enterprises That Eva-oriented Performance Evaluation System Make

With the further development of State-owned Key Enterprises reform and the widespread of value management concept, the traditional accounting profit-oriented performance appraisal system has been criticized constantly. It is common for enterprise to manipulate profits and carry out short-term behavior as the traditional performance evaluation system is based on total profit and ROE. Meanwhile, the traditional performance evaluation system only takes the cost of debt capital into account, as a result, the operators of enterprise consider the equity capital as ?free lunch?, which leads to the damage of investors? legal wealth. For the above reasons, there is an urgent need to establish an effective performance evaluation method to conduct activities of enterprise. In late 2006, the SASAC propose the concept of ?economic value added? and encourage State-owned Key Enterprises to adopt EVA since 2007 to evaluate performance of the operators. Since 2010, the SASAC require all of State-owned Key Enterprises to apply EVA to the evaluation of the annual performance instead of the ROE, also granting 40% weight. Until 2013, the proportion of EVA has accounted for 50% except for the military, scientific research, electricity enterprises, which indicates that the SASAC has affirmed the effects of the implementation of EVA.Since 2007, the SASAC has began to improve the performance evaluation system based on EVA on the purpose of taking advantage of advanced EVA method and value creation concept to give positive guidance to the activities of State-owned Key Enterprises, which is good to deepen the reform and transition development of State-owned Key Enterprises, also cultivate the ability of discourse right and sustainable development of State-owned Key Enterprises. So far, EVA has undergone a comprehensive implementation for two terms. It will be discussed in this paper whether EVA can lead State-owned Key Enterprises to make right decision and how much contribution EVA will make to value creation when the enterprise is under the guidance of EVA. It is less than two terms since the SASAC introduced EVA to the performance evaluation system, so when it comes to the two topics that the behavior change after EVA applied to the performance evaluation and the effects of behavior change has on the value creation, there are few empirical analysis related to above topics. However, this study is aimed at the preliminary probe of these two topics. And this is the innovation of the paper.This study has the following purposes:(1)Describing the guidance effects of EVA has on the operation behavior of State-owned Key Enterprises.(2)Empirical analyzing the contribution and to what extent that the operation behavior of State-owned Key Enterprises has made under the guidance of EVA.(3)Putting forward suggestions on constantly creating value for enterprise based on above study conclusion. In order to achieve above objectives, this study selects 201 central enterprises holding listed companies as the research object, starting from the point of advantages of EVA and intention of the SASAC introducing EVA. Firstly, introduce the calculate principle of EVA and give a detailed explanation of the performance appraisal method based on EVA to put forward behavior-oriented hypothesis under the guidance of EVA as following:(1)State-owned Key Enterprises continue to increase research investment and improve the capability of independent innovation.(2)Increase investment in primary industry, improve the profitability of main business.(3)Quality of earnings has improved and non-core business investments fell back to some extent.(4)Capital structure has been optimized, financing senses went back to rationality.(5)Investment behavior has been standardized and investment decisions became more cautious.(6)The profitability and operational capability have been improved.(7)Interest-free current liabilities increases and credit payment decreases. Secondly, select appropriate indexes to measure the above acts and use descriptive statistics analysis method to make preliminary analysis of behaviors of these companies, concluding that EVA has achieved preliminary results in terms of guiding good development of State-owned Key Enterprises. In order to accurately identify the driving factors of value creation, this study makes empirical analysis of how much contribution these behaviors has make to enterprise value creation by using the methods of correlation analysis and regression analysis. The results show that the profitability of corporate assets(return on total assets) and independent innovation research and design investment(R&D investment ratio) are the key factors in driving the increase of enterprise value. At the same time, construction in process, interest-free debt ratio and gross profit rate also have significant influences on the value of enterprise. Accelerating the asset turnover, expanding the size of assets and optimizing the capital structure of enterprise will have positive effects on value creation in some way. Therefore, State-owned Key Enterprises should take corresponding measures to improve above-mentioned behavioral indicators for the ascension of the enterprise value.