A Study On The Management Compensation, Stock Options Incentive And Earnings Management Of The Listed Companies

With the development of China Stock market, issues on earnings management of the listed companies have been paid more and more attention by creditors, stockholders, government stock supervision department and all the other earnings relevant groups. This paper does a systematic summaries and combing on theories of earnings management first, and then analyzes the phenomena of management compensation, stock option incentive and earnings management in our listed companies. Based on these studies, this paper does an empirical research on the relationship between management compensation, stock option incentive and earnings management at last.This paper uses the non-financial listed companies' data from 2003 to 2005 as the research sample, deleting ST, *ST, new listed and data missing companies. Methodically, after comparing and evaluating the methods of measuring earnings management in abroad, this paper chooses modified Jones Modle to calculate the Discretionary Accruals, which is used to represent the earnings management. Then this paper examines systematically the relationship between management compensation, stock option incentive and earnings management using Independent-Samples T Test, Person Correlate Analysis, and Liner Regression Analysis.The analysis reveals that: (1) Because there isn't significant relationship between earnings management and management compensation, managers don't have a notable motivation on self-benefit basis to reinforce earnings management for increase their compensation level; (2) The Stock Options Incentive stimulate managers on earnings management, the higher management stock proportion, the higher earnings management of listed companies.Also the analysis reveals that: earnings management has a positive correlation with the assest scales and; a significant negative relationship with debt ratio; a significant negative relationship with managerial expense. In the last part, this paper concludes the result, advances some countermeasures and some advices.