The Research Of EVA In Project Decision-making Based On The Perspective Of Managerial Entrenchment

Shareholders put their money into company,then it was able to establish and development,so the shareholders are the owners of enterprise.The primary responsibility of the enterprise is to create value for shareholders.How to maximize shareholders'value has become a global standard evalustion.This requires the enterprise to build a sound corporate govemance structure,establish a maximum value-oriented business culture,so that enterprise value is growing.,and a satisfactory return for shareholders, in order to win shareholders's trust and support.The enterprise value fundamentally depends on corporate investment behavior, investment behavior is directly related to whether the efficiency of investment can be maximized. However, in reality.,many companies are blind to invest, lack of investment and others behavior of non-efficient. Non-efficiency of investment is a behavior that not to the objective of maximizing shareholder value or the investment behavior, it is not only infect the most optimal allocation of capital, waste a lot of resources and production factors, but also the formation of bad debts, bad debts and thus will increase the financial risk.There are many reasons can-Lead to inefficient investment behavior, both may be caused by the different stakeholders resulting from the conflict between the interests, the enterprise may also be due to changes in external market environment and its, however, the managerial entrenchment as a result of non-Efficiency of investment decisions is an important reason.Managers in order to reduce job threats;they produce managerial entrenchment measures,they choose inefficient project.Why managers do that?On the one hand,they can continue to work in this company,even they have good performance on this project.On the another hand.the evaluate index in project decision-making before and after are out of touch.this can impact managers's performance,they may be dismissed,so they will to choose ineffient project.So we must research and find a index that can link the project evaluation before and after.EVA(economic value added)is also called ecomomic profit,in itself it is primarily as a performance evaluation index,it has been used in many companies in the world.This paper is to research how EVA is used in project decision-making. and then again on this basis, it focuses on how to apply a background of the project managers in the defense. Adopt a research perspective different from the past --- to managers generate self-defense behavior management factors as a starting point, from the managers and shareholders how the decision-making bias generated when starting, look at this bias by EVA, and then by taking a certain way To coordinate this bias, so that the use of EVA to the project better decision-making.This paper is divided into four parts.The first part is to review some managerial entrenment papers and summarizes current measures to reduce the managers'entrenment behavior.Then make a new perspective to be taken from the roots up to find out the nature of the problem.The send part is about some EVA theory that are related EVA dicision-making.The third part is about EVA with traditional decision evaluation method contrast, then we can know EVA's feasibility and superiority, in addition to effectively measure the profitability of the project, it is more beneficial to shareholders and managers agree on the decision-making criteria for any projects greater than zero. The fourth part is about how to apply EVA dicision evaluation index into this backbound which has managerial entrenment.