The bigger the scale, the better the benefits? In economics, economies of scale effect is interpreted as that with the gradual increase of enterprise scale, enterprise costs will gradually decrease and profits will become higher and higher. Is that really the case? This paper makes an empirical study on the relationship between enterprise scale and efficiency by using the real data of the world's top 500 enterprises, and draws the conclusion that the larger the enterprise scale, the better the efficiency. 1. The multivariate linear regression model of profit assets, shareholders' equity and the number of employees selects profit as the index to measure efficiency, and assets, shareholders' equity and the number of employees as the index to measure scale. 1. Model Hypothesis Explanatory Variables:-Profits of Fortune 500 companies in 2005 (millions of dollars) Explanatory Variables:-Assets (millions of dollars); -Shareholders' equity (millions of US dollars); -Number of employees (number of employees) Mathematical form: 2. Sample (data source) Fortune magazine (Chinese version, June 5438+ 10) 3. Estimated values of regression results: =336.6376, =0.00 15, =0. 1083, =0.0008 sample regression. T statistics are 1.5084, 2.2703,1.182, 0.6375 respectively. The p values are 0. 13209, 0.0236 15, 4.8386e-026 and 0.524 1 respectively. If the significance level is 0.05, the original hypothesis is accepted =0, =0, and the original hypothesis is rejected =0, =0. And the R-square of the model is 0.3252, and the adjusted R-square is 0.32 12, which shows that the model fitting is not good. The F statistic of the whole model is 79.693, and the corresponding P value is 0, so if the original hypothesis is rejected, the whole regression equation is significant = = = 0. 4. Economic analysis According to the regression results of the model, the significance test shows that the number of employees has no significant impact on profits, but shareholders' equity and assets have a significant impact on profits. The significance test of the whole equation shows that the whole model is significant. However, due to the small R square, the explanatory power of the model is not strong (only one third). 2. Model improvement Run the stepwise linear regression model or the multiple linear regression model of ROE and shareholders' equity on the same data, and get the following results: estimated value: =390.77 19, =0.00 15, =0. 1 102 sample regression plane expression: significance test: according to the output results of statistical software tools, t statistics, 65438p values are 0.05874 1, 0.027 179 and 4.501respectively. If the significance level is 0.05, the original hypothesis is accepted and rejected =0, =0. And the r square of the model is 0.3247, and the adjusted r square is 0.322, which shows that the model is not well fitted. If the significance level is 0.02, the hypothesis of =0 is also accepted. The f statistic of the whole model is 1 19.48, and the corresponding p value is 0. Therefore, rejecting the original hypothesis = = 0, the whole regression equation is significant. From the results of model regression, the significance test shows that assets and shareholders' equity have a significant impact on profits. The significance test of the whole equation shows that the whole model is significant. However, due to the small R square, the explanatory power of the model is not strong (only one third). Three. Model simplification From the above analysis, it can be seen that profits are mainly affected by assets and shareholders' equity, but when the significance level is 0.02, the influence of assets becomes insignificant. Therefore, we can simplify the model as follows, only considering the impact of shareholders' equity on benefits, while ignoring the impact of assets and the number of employees. Run the unitary linear regression model of shareholders' equity profit, and get the following results: estimated values: =429.7855, =0. 1208 sample regression linear expression: significance test: according to the output results of statistical software tools, the t statistics of are 2.03 1, 15.239 respectively. The p values were 0.03775 1 and 2.5662e-043, respectively. If the significance level is 0.05, the original hypothesis =0, =0 is rejected. And the r square of the model is 0.3 18, and the adjusted r square is 0.3 166, which shows that the model fitting is not good. The F statistic of the whole model is 232.23, and the corresponding P value is 0, so if the original hypothesis is rejected, the whole regression equation is significant. From the results of model regression, the significance test shows that shareholders' equity has a significant impact on profits. The significance test of the whole model shows that the whole model is significant. However, due to the small R square, the explanatory power of the model is not strong (only one third). From the data analysis of the top 500 companies, it can be seen that with the increase of scale, the benefits will increase, but the impact of scale on benefits is only one-third explanatory power. Personally, the number of employees has no significant impact on welfare, and assets have almost nothing to do with welfare. Only shareholders' equity has a significant impact on benefits, but this impact is only one-third of the explanatory power. Therefore, in order to improve efficiency, we must work hard in operation while increasing the scale. 4. Further study on the scale effect of the world's top 500 enterprises shows that the source of scale effect mainly lies in the following aspects: 1. For traditional production enterprises, with the expansion of production scale, the unit product cost will decrease with the expansion of production scale, thus bringing about the improvement of benefits. The main reasons can be summarized as follows: adopting advanced and efficient equipment; Improve the professional division of labor and standardized operation level; Reduce management costs; Save procurement costs through a large number of purchases. 2. Scale and integration of upstream and downstream can further strengthen the ability of multinational companies to resist risks in the world economic fluctuations. 3. For cross-industry and cross-regional enterprises, they can enjoy the benefits of synergy while reducing costs. Synergy can be manifested in the following aspects: brand effect; Enjoy the channel * * *; There are many oil companies in the world's top 500 list, such as Exxon Mobil, BP BP, Chevron and Texaco. It is reported that after the merger of Exxon Oil Company and Mobil Oil Company, it saves about 4.6 billion US dollars every year. The merger of Chevron and Texaco can reduce the cost by about $2 billion a year. The merger of the two companies has achieved economies of scale. A world-famous merger in IT industry has achieved a smooth transition after a year of calm, which is the merger of HP and Compaq. Since the merger of the two IT giants was officially announced on May 7th, 2002, HP announced on October 20th, 2002 165438 that it had achieved the goal of cost reduction, among which the integration of supply chain contributed the most. The nine supply chains before the merger are now integrated into five. It was originally planned that this measure would save US$ 2.5 billion by 2004, but only nine months after the merger, HP would save US$ 3 billion annually. In addition, after the merger, HP improved the channel strategy, formed a mixed channel sales model, and realized the synergistic effect characterized by channel enjoyment. All these make HP a leader in the global IT industry. Last year, HP ranked 28th, and this year it dropped slightly to 33rd. Another industry that appears frequently in the world's top 500 list is retail, such as Wal-Mart ranked second and Carrefour ranked 25th. For Wal-Mart, Carrefour and other retail enterprises, economies of scale are mainly reflected in the reduction of procurement costs, the reduction of fixed unit sales costs and the improvement of logistics and distribution operation efficiency. Of course, not all enterprises can make good use of their scale effect and synergy effect. We can also find many strange samples in the rankings. We can draw a scatter plot of shareholders' equity and profits. From this diagram, we can find that most enterprises are located in the normal area of scale: 0-500 million US dollars, and the profit is-2000-1500 million US dollars. However, some enterprises are far away from this area. Take Vodafone, which ranks 66th in the UK, as an example. Vodafone is three times larger than the normal area, but its profit is four times lower than the normal area, and it has been negative for three consecutive years, making it the company with the largest loss this year. It can't be said that the company is not doing well in using the scale effect. General Motors (the fifth place) and CBS (the 468th place) are located in normal areas, but they have the biggest loss of profits, ranking third and fourth respectively. Another company, UAL United Airlines, ranks second, but its shareholders' equity is also negative, which is a special case. There is also Gazprom, located at 102, which ranks second in scale, but its profit is 4 1% of ExxonMobil's profit. Therefore, this reminds our enterprises that while striving for scale, we must make good use of the benefits brought by scale, that is, we must ensure that we can reduce costs or achieve certain synergistic effects while striving for scale, and we must not pursue scale unilaterally or blindly. V. Interpretation and Analysis of Economic Value Added on the Relationship between Scale and Benefit The theory of Economic Value Added (EVA) was put forward by Stern = 1982. Its definition is as follows: economic added value = occupied capital of net operating profit after tax × capital cost rate. EVA measures the profit generated by enterprise operation after deducting capital occupation expenses. Compared with traditional accounting profit, EVA not only considers the cost of borrowing capital, but also the cost of equity capital, so it is a comprehensive index of operating efficiency and capital use efficiency. EVA can be obtained through reasonable adjustment and calculation of accounting statements, and its basis is accounting data. However, various adjustments to the traditional accounting profits can overcome various drawbacks and deficiencies existing in the current accounting system, thus accurately reflecting the economic benefits of enterprise management. Therefore, economic added value is usually called economic profit or residual income. From the definition of economic added value, we can see that economic added value is a new index that combines the shareholders' rights and interests used to express scale and the profits used to express benefits. In order to increase EVA, we should not only increase profits in the traditional sense, but also pay attention to reducing the cost of capital. Reducing the capital cost is to reduce the capital occupied by enterprises as much as possible under the premise of a certain capital cost ratio. Therefore, if an enterprise adopts economic added value as an indicator to measure its performance, it is equivalent to adhering to the dual goals of maximizing benefits and minimizing scale. Therefore, enterprises not only need to improve economic benefits, but also pay attention to one-sided expansion. It is precisely because of this advanced concept of economic added value that the theory has developed rapidly since it was put forward and has been highly recognized by the practical and academic circles. According to literature reports, many large companies in the world take economic added value as a performance measurement index, such as Coca-Cola Company in the United States, Sony Company in Japan, Siemens Company in Germany and Postal Company in the United States. In addition, many scholars have made an empirical study on the superiority of EVA index. Such as: Robert of the University of Auckland? 6? Professor kleiman once did a study to investigate whether companies that use EVA as a performance measure have higher shareholder returns than companies that do not use reference groups. The results show that the performance of companies adopting EVA system is better than the average level of the reference group, and the performance of companies adopting EVA system in the first, second and third years is better than that of the reference group by 2.87%, 12% and 12.2% respectively. Therefore, it is suggested that China's listed companies should also fully understand the role of economic added value in enterprise performance control and establish a performance control system based on economic added value suitable for their own companies as soon as possible. From the results of model analysis, we can see that the income will increase with the increase of scale, but the influence of scale on income is only one-third explanatory power. Personally, the number of employees has no significant impact on welfare, and assets have almost nothing to do with welfare. Only shareholders' equity has a significant impact on benefits, but this impact is only one-third of the explanatory power. Therefore, expanding scale does not necessarily mean improving efficiency. If we want to improve efficiency, we must work hard on management while expanding the scale.