Abstract: Corporate investment behavior is closely related to the performance evaluation of the management. A good performance evaluation method can affect and improve the investment efficiency of the enterprises. Combining the EVA-based performance evaluation system promoted comprehensively by SASAC among the central SOEs and making use of the data of the listed companies held by China’s central SOEs, this paper conducts an empirical test of the effect of EVA on enterprise’s over-investment. The study finds that the implementation of EVA performance evaluation has significant governance effect, which can inhibit the over-investment behaviors of the central SOEs. Based on the above conclusions, this paper offers some recommendations from the two aspects of EVA index correction and the investment decisions of the central SOEs.

Key words: EVA; over-investment; performance evaluation; central SOEs; investment efficiency