A Study On Managerial Compensation, Top Manager Altering And Earnings Management

With the development of securities market, the problems of earnings management appear gradually which have become one of our hot topics. Since earnings management is done by managers of listed companies, the behaviors of managers can inevitably influence earnings management. It has great significant to do positive research on the relationship between the management behaviors and earnings management. The paper tries to study the impact of managerial compensation and top manager altering which are the two typical characters of management behaviors on earnings management, hoping to provide some forceful advice on restraining earnings management.The main conclusions of the paper are as following:â‘ The regression model on managerial compensation and earnings management is constructed to test the effect of managerial compensation on earnings management.Based on the Jones model, the level of earnings management is measured. The results of multi-regression model show that compensation incentive induces earnings management, while equity incentive has an opposite effect.â‘¡The regression model on the top manager altering and earnings management is constructed to test the effect of top manager altering on earnings management.The results suggest that the year before the chairmen altering normally, they had marked earnings management behaviors, while two years before general managers altering normally, general managers had no marked earnings management behaviors.â‘¢Correlation analysis of managerial compensation and top manager altering is fulfilled, by which we find there is a correlation between managerial compensation and top manager altering.â‘£The regression models on managerial compensation, top manager altering and earnings management with the corporate governance difference are constructed to prove the effect of corporate governance on earnings management.The result shows good corporate governance structure can restrain corporate governance.