The Theoretical Research On EVA Value-Based Management

EVA is increasingly recognised in the global range, mainly because that at the same time it contains both productiveness and operating efficiency. Now EVA has been transformed into a value-based management methods. In a period of economic prosperity, markets perform strongly, a wide range of industries maintain profitability and enterprises enjoy huge margins from the economics of scale, all of this may make people forget or ignore the importance of value-based management. Because in this period capital has been created easily and value-added as a inertia, it does not need motivation or methods to seek value. However, once the economy has started showing a weak state, then venture capital limited, fierce competition has been excitated, and the enterprises'stock in the capital markets consecutively downturned, at this time the value based ideology seems particularly important to the management. Unfortunately China's enterprises is just in this business time. Our enterprises is facing with the following difficult problems: The capital costing of Chinese enterprises is staggering; The efficiency of creating value in Chinese enterprises is low; China is undergoing "bubble economy" course which occurred in Japan in the 1990s, terribly,blind investment is corrading the total social value; Chinese capital market is inefficiency; China is short of talent managers, and the management concept drops behind; Chinese existing pay structure lacks competitiveness in the global range.In many of Value-Based management methods, I think the EVA Value-Based management system will comprehensively solve these problems. This Paper based on scientific analyzing of the EVA Value-Based Management method, taking EVA financial management objectives as a logic starting point for the theoretical framework, using standardized methods, through accounting adjustments to obtain EVA (Economic Value Added) indicator, under the guidance of EVA's scientific concept itself, established the method of EVA incentive mechanism (Value guiding) and the EVA decision-making theory (Value Creation). Then giving rise to the EVA value-based management theory's localization thinking, in-depth analying of the EVA value-based management theory's problems encountered in the localization process and proposing corresponding solutions, finally I will establish a theoretical framework of EVA value-based management method for the foundation.