Profitability of SSE 50 Sample Companies Frow the View of EVA

Economic Valued Added (EVA) has led an evolution of corporate finance in many well-known abroad enterprises but be paid little attention in China. The empirically analytical results on the SSE 50 sample companies showed that 86% of these companies had no profitability in 2008 from the view of EVA comparing to 2% from the view of accounting profits. The potential reason may be (1) the leading shareholder of most of the SSE 50 samples is the state; (2) the owner´s equity often be considered to be “self-owned” by the samples while not by the stockholder; (3) most stockholders speculate but not to invest on the intrinsic value of stock; so their ignore companies´ profits, nevertheless EVA;(4)the concept of EVA is based on the opportunity cast of capital, but in China the average investors lack of opportunity to invest their money rather than stock market. In order to be popularized, EVA idea had to be obliged to be used in assessing CEO and his team members´ performance. The calculation of the EVA should be standardized and the index of EVA as well as other related index should be added in the Mandatory Information Disclosure System. Thus investors will have chance to know, to understand this index then to make decisions based on it.