Research On Overinvestment Problem Perspective Of EVA

Investment is an important activity for enterprises.Efficient investment can make enterprises have more competitive advantages and better development prospects,while inefficient investment will damage shareholders' rights and interests.In recent years,the investment scale of China's state-owned enterprises is relatively large,but the investment efficiency is not high.Some investment choices are not optimal investment opportunities for the company's value,especially for those projects with negative net present value.Reduce the efficiency of the use of funds and generate excessive investment.In order to improve the investment efficiency of state-owned enterprises,the State-owned Assets Supervision and Administration Commission of the State Council incorporated the EVA indicator into the annual assessment system of the heads of state-owned enterprises in 2010,so that the heads of state-owned enterprises can invest more from the perspective of shareholders,which is conducive to the improvement of state-owned enterprises.Investment efficiency,standardizing the investment behavior of the heads of state-owned enterprises.At the same time,along with the implementation of the supply-side reform,the state focuses on the development of China's traditional industries,of which the steel industry is one of the industries that China is focusing on.The investment in the steel industry is characterized by large amounts and long payback period.There is a greater risk of investment.A large number of small steel companies have shut down their production,and state-owned steel companies have more investment opportunities.In this case,the steel industry is even more It is prone to excessive investment.Therefore,in such a complex macro environment,it is of great practical significance to further study the investment efficiency of state-owned enterprises.This paper selects Baosteel Co.,Ltd.,the leading enterprise in the steel industry,as a representative,and comprehensively analyzes its investment situation and the impact of the implementation of EVA assessment on its investment efficiency.This paper chooses to analyze the inhibition of excessive investment by EVA assessment from the perspective of EVA assessment.Firstly,based on the understanding of the basic situation of Baosteel,the fundamental analysis of Baosteel's investment,profitability and EVA situation before and after EVA assessment is based on the preliminary analysis of the relationship between investment and profit and EVA.Further,through the Livant and Hankel models,the degree of over-investment of the company is measured,based on the manager'sover-optimistic theory,manager's defense theory and manager's risk appetite theory,respectively,from investment return requirements,investment size,investment risk.The four aspects of premium investment decision-making methods are used to analyze the inhibition effect of EVA assessment on irrational behavior,and draw conclusions:(1)EVA assessment can improve the investment return requirement of enterprises and reduce the excessive excessive optimism overestimating the return on investment of enterprises.Investment behavior;(2)EVA assessment can inhibit the scale of investment of enterprises,reduce the blind expansion of investment scale caused by managers' defense psychology,and reduce excessive investment;(3)EVA assessment can reduce the risk of investment and reduce expectations for the future Underestimation caused by underestimation of project investment risk,Overinvestment can estimate their ability to take risks caused;(4)EVA assessment can reduce the psychological defense managers to optimize business management decision-making,reduce inefficient investment.