Equity Incentives And Earnings Quality Relations

Equity incentives, as managers of a long-term incentives, is the most important links and content in corporate governance mechanism. For listed companies, corporate equity incentive may have complicated the economic consequences: on the one hand, equity incentive constraints can be effective in the business incentive pay under traditional "dry Ze and fisheries" short-term behavior, and is conducive to the sustainable development of enterprises; On the other hand, equity incentive is full of great benefits, and has the temptation to manipulate earnings, inducing earnings quality down. Domestic and international many studies experience show that the above effects do exist. So, in China listed companies, equity incentive plays on what effect in end? What are the factors that cause these effects occur? Earnings Quality on equity incentive plans to introduce influential?In view of this, the paper selected between 2005 -2009 of listed companies as a sample, providing empirical evidence on the above questions. Firstly, all the listed companies with equity incentives and the sample size the relevance of earnings quality, earnings quality, and how it affects the development of the equity incentive plan. Then, using the modified Jones model, respectively, the year before the implementation of equity incentive, equity incentive and equity incentive year one year after the three stages of analysis, the last use of the modified DD model year on the implementation of equity incentive analysis of data, in order to verify the implementation of equity incentive effects before and after the earnings quality.This paper innovations lie in the earnings quality rather than the company performance from the perspective of the investigation equity incentives governance mechanism function, not only for the stock ownership incentive research earnings quality implementation effect on the strength, and the study of the stock ownership incentive effects of earnings quality. The empirical results show that overall, equity incentive and earnings quality, on one hand, accounting surplus associated with quality and equity incentives related, accounting accruals quality is low, senior managers will hold more shares, the implementation of equity incentive strength increase; On the other hand, management the implementation of equity incentive process of earnings management, make the quality descend, listed company earnings in the implementation of equity incentive 1st and current, before would make rising financial reporting accruals reverse earnings management, the listed company in a year after the implementation of equity incentive to make adjustment financial report accruals thickening of positive earnings management. This paper validate equity incentives and earnings quality relations, so as to explore how to make effective clarified through equity incentive mechanism, enhance the company's earnings quality for the stock ownership incentive further implementation in China put forward some countermeasures, guide enterprises to improve related compensation for the related departments to make plan, China to enhance corporate earnings quality and other important issues to provide a meaningful policy reference.