Research On The Impact Of EVA Evaluation On The Central Enterprises' Over-investment Behavior

Enterprises' investment behavior and efficiency problem has always been the focus of the relevant theory and practice.For a long time,investment in fixed assets of central enterprises in China has maintained a larger strength.The growth rate of investment is very fast.Extensive growth concept derived severe over-investment behavior.How to control central enterprises' over-investment and how to make investment behavior more rational and effective has become a problem to be solved.In order to guide the central enterprises' investment behavior and improve the efficiency of investment,the State-owned Assets Supervision and Administration Commission(SASAC for short)has already fully implemented EVA performance assessment in the central enterprises since 2010.Perfect performance evaluation and assessment system plays an important role in guiding enterprise business behavior.Enterprise life cycle theory is the important domain in the study of organization.According to the theory,enterprises have different characteristics during the different development phases,and face different severity of the asymmetric information and agency problems.Therefore,the over-investment behavior in different stage of development will vary,and the governance of over-investment behavior by the use of EVA will also be different.Based on the EVA theory,enterprise life cycle theory,principal-agent theory and asymmetric information theory,this study selects the data of the central listed enterprises in from 2007 to 2013 as the sample.Then it studies the impact of EVA evaluation on the over-investment behavior on the basis of the enterprise life cycle perspective.Through empirical analysis of descriptive statistics,the variance test and linear regression,this study concluds that central enterprises' over-investment level decreased after the SASAC fully implementing EVA evaluation,and there are significant differences.EVA evaluation achieved the expected effect of good governance for over-investment.Through correlation test between over-investment and enterprise life cycle,it comes to the conclusion that central enterprises' over-investment level is changing along with the enterprise life cycle.The differences between different stages are significant,and the degree of over-investment for enterprises in growth period is the most serious.In addition,in the mature period of the enterprise life cycle,EVA evaluation achieved the most significant effect in governing central enterprises' over-investment behavior.The research findings fully affirm the achievement of the SASAC's introducing EVA performance evaluation methods and providing empirical support for the promotion and adjustment of the EVA concept.It suggests that when studying or governing central enterprises' over-investment behavior,identification of its stage of life cycle is needed before a targeted application and adjustment of governance measures are made.In the promotion of EVA performance measurement,this identification is also needed in order to adjust EVA performance to the point and make the governance effect of EVA evaluation to the better.On the whole,inspection of all of the above problems could be used to guide the enterprises' investment behavior,to improve the efficiency of enterprises' investment,to help with understanding the change trend of over-investment behavior and EVA evaluation's governance effect.This study has significant meaning in the enforcement and promotion of EVA concept to carry out and EVA adjustments according to enterprises' different development stages.