Study Of The Effect Of The Implementation Of EVA-based Performance Evaluation System

SASAC(State-owned Assets Supervision and Administration Commission of the State Council) announced in2009the EVA (Economic value added)index will be formally introduced in a new term assessment of the heads of central enterprises beginning of2010. It accounting for up to40%of the weight becomes the most important indicator of the new assessment methods. As one of today’s hottest evaluation, the scholars at home and abroad has long been some consensus about the theoretic advantages of EVA. Its application in foreign enterprises has also been a lot of success stories. The SASAC implementation the EVA-based performance assessment in central enterprises hopes by means of the EVA to guide the conduct of the enterprises, hence correct the bad behaviors that have long plagued in the central enterprises and enhance its market competitiveness and sustainable development capacity. But in the face of China’s socialist market economy, less mature capital markets, the special entity of the central enterprises, old and new performance evaluation indicators in parallel,the localization transformation of the EVA indicator, whether could the EVA continue to write brilliant achievements abroad and bring a different kind of behavior for the central enterprises? Both of the question should be the focus of research. This paper is a strong attempt in this regard.After exploring the EVA theory, the superiority and inherent defects of EVA will be cleared in this paper. Then combined with the problems of the traditional performance evaluation system, the paper will analyze the need for implementation of EVA in China’s central enterprises. Then a detailed interpretation will be conducted about the new performance evaluation system based on EVA for the person in charge of the central enterprises. The possible changes in corporate behavior are summed up from two angles of the SASAC and businesses and two levels of the behavior and performance after the implementation of the new assessment in the central enterprises. Then the paper selects appropriate metrics for every possible behavior, and on the basis of the relevant data from2007to2010of the listed companies held by central enterprises, the paired samples required will be constructed by a new method. The paper then tests the paired samples in two related samples statistical test in SPSS to determine weather the new assessment brings some changes in behavior for the central enterprises or not. After that, the paper continues to test the contribution of the behaviors to the corporate value creation using correlation analysis and regression analysis. Finally, according to the empirical conclusions some reasonable suggestions is going to be put forward for the performance assessment system of the responsible persons of the central enterprises.This article has several innovations in research as follows:first,on the background of EVA assessment, not only does theoretical analysis be made,but also empirical studies about the impact on the central enterprises’behabior are made. Second,the paper constructs a new sample comparison method with good logic. At last, according to the provisons of SASAC, EVA values of central enterprises are calculated in person rather than reference to relative journal.There also are some defects or shortcomings in this study such as the limited time frame of the research data,the relative smaller capacity of some samples,a further study in the changes of corporate behaviors.In those regards,I will continuously improve and refine the study in the future.