Empirical Study of Integrated Eva Performance Measurement in China1/Étude Empirique Sur Eva Intégrée de Mesure Du Rendement En Chine
Canadian Social Science - Vol. 4 Nbr. 2, March 2008
Lin, Chen
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Traditional performance measurement has some limitations. Economic Value Added (EVA) is a real method to measure the company's true value. This paper discussed on how to improve traditional performance measurement with EVA. It presented the integrated EVA performance measurement (IEPM) model. The superiority of IEPM model to traditional performance measurement was empirically analyzed with BP neural network and the data from China's listed companies. The results showed that the measurement ability of IEPM model was superior to that of traditional performance measurement. Its prediction ability was also proved to be better than that of traditional measurement. It suggests that introducing EVA to performance measurement well reflects the company's real profit. So it is effective and reasonable to use IEPM model to evaluate and predict the company's performance.
Empirical Study of Integrated Eva Performance Measurement in China1/Étude Empirique Sur Eva Intégrée de Mesure Du Rendement En Chine
(ProQuest: ... denotes formulae omitted.)
1. INTRODUCTIONPerformance measurement is a very important factor for solving agency problem. The performance measurement system used in China usually relies on traditional accounting measures. It measures the company's performance from such aspects as accounting profit, assets operation ability, debt paying ability, and growth ability. Traditional accounting measures are easy to be quantized and the data are also easy to be obtained. But there are still some problems With traditional performance measurement. First, its evaluation indices are mainly from the Company's financial report based on Generally Accepted Accounting Principles (GAAP). Many kinds of preparations, goodwill, deferred taxes and some other items are deduced directly from the income account. So the legal capital is considered to be reduced and some unnecessary financing or investment behavior occurs. Second, debt cost has been reflected in traditional performance measurement, but capital cost is...Try vLex for FREE for 3 days
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