Research On Manager EVA Motivation Under The Condition Of Market Fluctuation

A view has emerged gradually in America and other western developed countries since 1990s:the most important task of a company is making shareholders'value. Accordingly, value-based manager motivation was becoming more and more popular. Among these, EVA (economic value added) motivation is the most popular one. EVA is the margin of NOPAT and tall costs. At the end of 2009, China's State Capital Management Committee of State Department required big state-owned companies assess performance based on EVA, and launched the first official document to make EVA as assessing indication in the world.Accoring to traditional EVA motivation models, only when EVA orâ–³EVA is positive, do managers get bonus, and ignore the influence of outer unsettled factors. According to the motivation principle of assessing what you want, this paper insists that the bonus should be paid to managers if they contribute to shareholders'value. Creating positive EVA and cutting down EVA loss are both contribution to shareholders'value. Because of the influence from outer uncertainty factors, when in the sordid circumstances, the managers'bonus should be paid if they cut down the loss of shareholders'value even EVA orâ–³EVA is negative, and vice versa. So the research of EVA motivation under the condition of market fluctuation is very important.Based on Accountant Theory, Capital Asset Pricing Theory, Principle-agent Theory, we use comparing research method, model founded, empirical analysis, case study to analyze Stern Stewart adjustment, calculate capital cost and manager EVA motivation by consideration of outer fluctuation factors. The main researching points are as following.Firstly, this paper researches Stern Stewart adjustment methods under the condition of market factors. Add market factors to traditional EVA adjustment theory, and emerged needed adjustment items. In addition, improve adjustment methods.Case study shows that the EVA performance which considering outer factors can reflect managers'actual performance better than the traditional one. Secondly, building and analyzing managers EVA motivation model under fluctuation factors. On the assumption that the EVA is decided by outer factors, the ability and efforts of managers, we optimize the traditional EVA motivation model and reach a better one.Thirdly, using SPSS statistic software to analyze 1,041 listed companies economic data, and concludes that EVA is better than share price or NOPAT when incentive managers.