Research On Earnings Management Of Listed Firms Based On Managers' Stimulation

The article embarks from managers'stimulation, uses the information economics and the enterprise contract theory to make the theoretical analysis and the demonstration studies. The goal is to deepen the understanding of earnings management theory, to provide some suggestions for the formulation of managers'reward contract and the design of managers'stimulation mechanism, and to restrain earnings management of our listed firms.The article uses firms of manufacturing industry of Shanghai stock exchange in 2005 as the study sample, chooses the variables of managers'stimulation and earnings management to construct the model, dose a demonstration research of our listed firms'earnings management by using the statistical software. The research obtains: The relation is extremely remarkable between managers'reward and the degree of earnings management. The higher of the managers'reward, the more intense of the earnings management motivation of the managers. Moreover, we discovered that, the relation was also remarkable between the level of managers'holding stock and the degree of earnings management. The higher of the managers'holding stock level, the lower of the degree of earnings management.The examination result of this article indicates that, managers of the listed firms have the motivation to manage earnings for improving their reward. But holding share of managers helps weaken this motivation. Besides, the effective movement and supervision and management of the stock market, the consummation of corporate governance and the perfection of all that necessary systems are also the important arrangement to restrain our listed firms'earnings management.