Assessment Based On Economic Value Added (EVA) Value Of Listed Commercial Banks

In nowadays’highly developed market economic environment, as corporate mergers and acquisitions become increasingly frequent, enterprise valuation is also more and more important. Among those kinds of common methods of corporate valuation, the Income approach is widely welcomed because of its scientific and rigorous, and of which the advanced Economic Value Added (EVA) approach has gradually applied to the evaluation of many types of enterprises. For commercial banks, EVA is progressively becoming the core of its performance management system. Therefore, the use of EVA seems more reasonable for commercial banks. This paper begins with the theories of comparative enterprise valuation review, presents the EVA valuation theories and models, and then analyze the characteristics of commercial banks, using a unique method of accounting adjustment to evaluate its intrinsic value, at last, this paper gives some conclusions and recommendations.In this paper, theoretical analysis and empirical analysis are combined to use, and the article is divided into five parts. The first part start with the origin of enterprise valuation theory, then studies Irving Fisher’s capital value theory, Miller and Modigliani’s MM model, and William Sharpe’s pricing model. Hereafter analyze the four basic methods of evaluation and make a comparison. The second part focus on the basic EVA theory and method. Started from the EVA model formula, this part analysis the accounting adjustments rules, expounds the calculation methods of NOPAT, TC and WACC, then constructs a corporate valuation model based on EVA theory. The third part discuss the nature of commercial banks, make a distinction between industrial and commercial enterprises, analyzes the particularity of commercial banks’valuation. The fourth part use empirical analysis to apply the EVA method to the evaluation of commercial banks, then draw a conclusion and make some analysis and verification. The fifth part is a summary and prospect of this paper, describes the limitations of the study and some sections need to be improved.