TITLE:
Economic Value Added, Corporation Growth and Overinvestment—Based on State-Owned Corporations
AUTHORS:
Ying Wang, Yaqi Wang
KEYWORDS:
EVA (Economic Value Added), Corporation Growth, Overinvestment, SOEs (State-Owned Corporations)
JOURNAL NAME:
Modern Economy,
Vol.7 No.14,
December
14,
2016
ABSTRACT: This paper analyzes if EVA (Economic Value Added)
evaluation system can reduce the corporations’ overinvestment phenomenon by
using the study sample of 204 listed SOEs (state-owned corporations) with the
sample period from 2007 to 2012. Then according to Tobin’s Q value, we divided
all the 204 listed SOEs into two groups, high growth corporations and low
growth corporations, and observed if the implementation of EVA has different
inhibition effect on the listed SOEs of different growth. The results indicated
that EVA can’t significantly reduce the listed SOEs’ overinvestment, but it has
different inhibition effect on different growth corporations. The EVA can
significantly reduce low growth listed SOEs’ overinvestment, which suggests the
EVA evaluation system can improve low growth corporations’ investment
situation.