A Case Study Of Main Problems And It's Solutions To The EVA Value Management

This paper studies the main problems and it's solutions to the EVA value management by taking the “Sinoma International” for an Example.Up to now,domestic and foreign research focuses on the EVA incentives,the effectiveness of EVA value management and the limitations of EVA values,but there are relatively few studies on application difficulties.This article is to make up for the lack of relevant research.In the case of separation of ownership and management rights,the objective function of the agent is not always consistent with the principal.The agent may start from the personal goal and infringe the interests of the client,such as insider control and blind expansion of investment scale.This paper first studies the generation of EVA value management based on the four theoretical foundations of information asymmetry theory,principal-agent theory,insider control theory and opportunity cost theory.After expounding the main content of the EVA incentive mechanism,this paper compares EVA incentive mechanism with traditional incentive mechanism.It is found that EVA incentive system is more conducive to managers to consider issues from the perspective of shareholders.This paper combines the development history of EVA value management in China and the application of EVA management in performance evaluation,value management and incentive mechanism to study the difficulties in applying EVA value management in China's enterprise management.In the case study of “Sinoma International”,it finds that there are big problems in the application of EVA value management,such as information asymmetry,principal agent and insider control in management,difficulties in the implementation of the bonus bank plan,the capital cost rate is not reasonable and so on.In the empirical part,this paper compares and analyzes the changes in EVA value of enterprises and the nine financial indicators representing the profitability,solvency and operational capability of the company before and after the adoption of the EVA incentive system between 2004 and 2017.This paper finds that the principal-agent problem and the insider control problem still exist,the objective scope of the EVA incentive mechanism is limited and the difficulty of the implementation of the dividend bank plan is still obvious,and the EVA value calculation method is simplified and capital.Problems such as unreasonable cost rates have not been completely resolved.Finally,combining the above analysis,this paper proposes that enterprises strengthen information disclosure and internal control systems,adopt appropriate capital cost ratios,design EVA incentive mechanisms that are compatible with enterprise reality,and pay attention to the role of EVA incentive mechanisms,and improve EVA calculation methods.