Research On Over-Investment Governance Of SOEs Based On EVA Performance Evaluation With The Background Of Government Intervention

The21st century has seen a rapid growth of our domestic growth of our country, along with a proactive fiscal policy, the corporate investment in fixed assets has been rising steadily, but inefficient investment phenomenon is also not uncommon, especially in SOEs, inefficiency investments phenomenon is particularly serious. One of reason is the Chinese particular financial system, due to the public governance objectives of local governments, as well as the motivation to be promoted of officials lead to over-investment of state-owned enterprises. The second reason is the owner of state-owned enterprises is vacant, managers of state-owned enterprises in order to pursue personal interests or profit targets, blind pursue the expansion of business scale ignoring the efficiency of capital investment, formed the current situation of inefficient investment of SOEs. The third reason is the our unique system of property rights, the SOEs are facing fewer financial constraints, making the operators did not attach importance to investment efficiency. Despite the low return on investment, the SOEs still have a great impulse to invest, and wasting a lot of social resources. The persistence of this phenomenon impede the sustainable economic development in our country.In order to control the over-investment issue of SOEs, the SASAC decides to promote economic value-added (EVA) performance evaluation in central SOEs by stages, and had got some achievement from2010. So the Local SASAC carried out the preparatory work of EVA performance evaluation successively. EVA is different from traditional accounting indicators, it represents operating profit after deducting the cost of debt capital and equity capital costs, in order to examine the actual "economic profit" of the company. The calculation of EVA determines its ability to remind those managers to pay attention to equity capital, improve investment efficiency and achieve business value creation. However, in the case of the long-term existence of the phenomenon SOEs over-investment caused by the government intervention, whether the EVA based on agency problems can really curb excessive investment in state-owned enterprises? This thesis will use state-owned enterprises as samples which has applied EVA assessment. And research EVA performance evaluation’s governance effects on corporate investment behavior. Empirical study shows that EVA performance evaluation can inhibit the excessive investment, but the effect can be affected by government intervention. This study has important practical and theoretical value to strengthen the EVA application of Chinese state-owned enterprises to improve the efficiency of investments.This thesis integrated use standardized research methods and empirical research methods to study the governance effect of EVA on the behavior of the SOEs investment with the background of government intervention. And give some policies and recommendations according to the situation of the implementation of EVA assessment in Chinese state-owned enterprises. This paper mainly has the following parts:Firstly, the introduction. This section introduces the research background, significance, content and ideas and methods.Secondly, the theoretical foundation and literature review. This part reviews the research status of EVA, government intervention impact on corporate investment behavior, and analysis the contributions and inadequate of related theory.Thirdly, the institutional background, theoretical analysis and assumptions. This section first pointed the motivation of state-owned enterprises over-investment from the system level, and then the theoretical analysis the government intervention will have an impact on the implementation of EVA assessment, then hypotheses.Fourthly, the study design. Firstly give a brief introduction of the sample data and sources, followed by the define of over-investment, government intervention EVA variables and other control variables. Finally, build the model of empirical research according to research inside and abroad.Fifthly, the findings and analysis. This part take the data of state-owned listed companies from2008to2012as sample for statistical analysis, and empirical analysis the governance effect of EVA assessment on the excessive investment behavior of state-owned enterprises in varying degrees of government intervention.Finally, the conclusions and policy recommendations. This part summarize the results of this study and present research findings and policy recommendations of this topic. In conclusion, on the basis of existing literature and the special system of our country, study on the effects of EVA performance evaluation’s governance on corporate investment behavior from the level of government intervention can be very important. On the one hand it provides a new perspective for the existing literature research on the theory of performance evaluation. On the other hand, the conclusions of this paper give some important guidance and reference for the SASAC further policy and measures on standardize the behavior of state-owned enterprises.