The State-owned Enterprise Executives Incentives And Earnings Management Empirical Research

The problem of agency by agreement, which is the result of seperation of property right in the modern enterprise system, not only makes agents have moral risk and reversed choice, but also leads to the creation of earnings management. Behavior of manipulating earnings by general managers is a popular discuss in academic world. This paper, which is in the background of financial crisis and in the special system that most of general managers are under the control of government and owner absence of government-owned corporation, it delves into the possibility of carrying out the earnings management by general managers.This paper takes the principal-agent theory as the starting point. First of all, it analyzes the problem upon the existing theory of earning management and the defects of incentive system for general managers in government-owned corporation, inspects the relationship between earnings management and general managers from the aspects of wage structure, the leaving time, the pursue of promotion and the discuss power in accouting policy change, which lays a strong foundation for the rest of paper. Secondly, this paper measures the degree of earnings management through JONES model, and does the regression of induced variable and independent variable which may cause the behavior of earnings management. The result shows: in the distributing situation of wage structure for general managers, the lower the percentage of performance pay to total pay, the higher the possibility that the general managers make earnings management through smoothness of profit; the shorter the period of leave post, the lower possibilty to make earnings management while the general managers consider about the future occupation career; The probabilty that general managers for promotion to make earnings management is"U". As the age of general managers increase but still under 51, the probability that general managers would like to manipulate earnings will decrease because of the consideration of promotion; general managers do not have such a strong desire for promotion when they are over 51, so the degree that they would like to manipulate earnings increases; the more power the general managers have, the stronger motivation to make earnings management. Finally, this paper makes a summary, indicates the shortage, and provides suggestions on this topic for further discussion.