Research On The Influence Of EVA Performance Evaluation On The Finance Behavior Of Central Enterprises

Central enterprises have made great contributions to the rapid development of China’s economy.Most central enterprises are in the leading position in the petroleum,petrochemical,electric power,national defense,communications,transportation and other industries,and they hold the lifeline of the national economy.The management of central enterprises has always been subject to numerous attention.After years of reform of the central enterprises,central enterprises gradually established modern enterprise system,and the development goals of central enterprises have also changed from restoring the national economy to higher quality development.Central enterprises have embarked on the path of rapid expansion.Indicators such as operating income scale,net profit,and stateowned capital scale grew rapidly.At the same time,under the original performance appraisal mode with the focus of profit indicators,due to the establishment of the modern enterprise system,the agency problem brought about by the separation of the two powers,the unique management mode and system background of the central enterprises in China,the management of the central enterprises appears a series of problems: diversified business phenomena,excessive investment,pursuit of scale expansion;entering the stock market and options market to speculate,which increasing the risk of corporate capital investment;insufficient investment in research and development,weak independent innovation;investment impulse,repeat construction,spending huge sums of money into unfamiliar industries,regardless of the cost of investing capital,seriously wasting state capital waste,etc.In order to solve the above problems,after experiencing trial calculations and pilot projects,the State-owned Assets Supervision and Administration Commission officially implemented the EVA performance appraisal method for central enterprises in 2010.The EVA index instead of the ROE indicator has become the main appraisal indicator for the operating performance of central enterprises,and directly linked to the compensation,appointment and dismissal decisions of the heads of central enterprises.The management of central enterprises is moving from “target management” and “strategic management” to “value management”.After the central enterprises fully implement the EVA performance appraisal,whether the EVA performance appraisal method achieves the expected results and whether the EVA performance appraisal method is suitable for the operation and management of China’s enterprises has become a concern of all circles.The implementation effect of EVA performance appraisal has become the basis for the SASAC to formulate or improve the next assessment method.It is of great practical significance to study the implementation effect of EVA performance appraisal method.However,in China’s current research on EVA,the research focuses on the theoretical analysis of EVA,the establishment of enterprise management model based on EVA,and the research of enterprise value based on EVA.There are few studies on the implementation effect of EVA.The research methods are also based on empirical analysis,and there are few case studies.This paper uses normative research and case study methods to pay attention to the implementation effect of EVA performance evaluation of central enterprises.On the basis of theoretical analysis of the economic consequences brought by the EVA assessment,the paper analyzes the impact of the assessment methods prescribed by the SASAC and analyzes and predicts the financial behaviors adopted by the management after the implementation of the EVA assessment method.Based on the previous theoretical analysis,Huaneng Power International Co.,Ltd.was selected as the case analysis object.This paper compares and analyzes the changes in financial behaviors of asset use efficiency,financing,investment and asset disposal before and after the implementation of EVA performance appraisal from the horizontal and vertical perspectives.In addition,this paper also selects the central enterprises affected by EVA as the sample group,and the A-shares are not controlled by the same industry enterprises affected by EVA as the control group.Then this paper compares and analyzes the changes of the two groups of data before and after the implementation of EVA performance appraisal,and try to minimize the contingency of the results in the individual case analysis.After the analysis,it is found that the implementation of the EVA performance appraisal method will cause Huaneng International’s financial behavior to change to meet the assessment requirements:(1)EVA performance appraisal method urges Huaneng International to strive to maintain high efficiency of fund use,shorten the accounts receivable and inventory turnover days,and improve asset utilization in the face of severe industry situation and reduced overall capital use efficiency;(2)The EVA performance appraisal method enables Huaneng International to improve its short-term debt ratio and uses higher-scale interest-free current liabilities to optimize its capital structure;(3)EVA performance appraisal method enables Huaneng International to focus its investment direction on the main power production industry,reduce unnecessary investment,increase investment in R&D and innovation,and optimize investment structure;(4)The EVA performance appraisal method enables Huaneng International to speed up the disposal of nonperforming assets and eliminate unprofitable or loss-making investments and businesses.(5)The implementation effect of the EVA assessment method has not fully appeared in the case enterprise because the SASAC’s provisions on the EVA assessment method are not perfect,the enterprise’s understanding and acceptance of EVA is low,and the capital market is imperfect.This paper provides some data and experience support for enterprises to implement EVA performance appraisal.Based on the theoretical analysis of EVA performance appraisal effect,this paper deeply analyzes the impact of Huaneng International’s implementation of EVA performance appraisal on corporate financial behavior and existing problems,which is worthy of attention from the SASAC and enterprises.This paper hopes to further enrich the research in related fields,provide theoretical guidance for the optimization of ESA-based performance appraisal methods,and provide reference for the government to implement relevant policies and other companies to implement EVA performance appraisal.