A Study On Stock Incentive System Of Listed Company Based On Earnings Management

The stock incentive mechanism , applied first by U. S. high-tech companies in the 50's of 20th century, was introduced into China in the early nineties. With the gradual advancing of the non-tradable share reform, the stock incentive system has grown vigorously in China. The origi-nal purpose of the system is to lower the agency cost between the shareholders and managers. However various problems also arise easily in the implementation process,such as manager's moral hazard and information asymmetry used by managers to manage the earning, against the interests of shareholders.For the stock incentive mechanism itself, China is in the developing period and the related laws, regulations and policies gradually improve. Referring to foreign and domestic literature about stock incentive and earnings management, and combined with the actual situation of the stock incentive in our country recently, the thesis selected samples and set up model to reveal the motivation relationship between the stock incentive mechanism actualized to the executives by listed companies and earnings management behavior of managers, and the effect of incentive pattern as well as the character of large shareholder on the degree of earnings management, which will contribute to the further improvement of the stock incentive mechanism. This thesis consists of four parts:The first chapter is the introduction. The background as well as the writing significance is dis-cussed .After the literature collected and a comprehensive review given, the framework , main content and research methods are put forward.The second chapter is the theoretical analysis part which analyses the earnings management triggered by implementation of stock incentive mechanism. Based on the conclusion of stock in-centive system's validity, the thesis profoundly analyzes the effect of the stock incentive mecha-nism on managers'behavior, laying foundation of demonstration analysis.The third chapter is the analysis part which contains the measurement method of earnings management and the influencing factors. Firstly introduced three basic methods in the past measurement of earnings management .Compared the advantages and disadvantages of the three methods, we chose the accruals method, then analyzes four factors which might have influence on the earnings management , providing theory basis for the forth chapter.The fourth chapter is the empirical research part which discussed earnings management trig-gered by equity incentive plans .Firstly we choose'accrued method'as the measurement of the earnings management and fully expounds the reasons, then select equity incentive by listed companies as the research sample , set variables and research hypotheses and model, make use of SPSS 13.0 software and multivariate regression method to generate conclusion .It contained: the implementation of equity incentive plan lead to earnings management ,the stock number related to the earnings management, state-controlled listed company's earnings management behavior is more notable than that of non-state-owned holding listed companies, ownership restriction de-gree is negatively related to the earnings management, the adoption of restrictive stock or stock options were no difference to earnings management.The fifth chapter is the conclusion and suggestion.