The Corporate Governance Effect Of Managerial Stock Incentives

Managerial stock incentives, been widely used in china’companies since two thousand and five. The Purpose of managerial stock incentives is encouraging the managers. The incentives push the managers and the shareholders have the same interest. The final purpose is to improve the value of the company. This paper uses the sample of710firms in2006-2010., and examine the corporate governance effect of managerial stock incentives from the perspective of earnings management and firm performance.First of all, This paper investigates the influence of managerial stock incentives on earnings management. The paper finds that the managerial stock incentives have negative influence on earnings management for public listed firms which have not declare managerial stock incentive plan. But this negative influence becomes statistically insignificant for the firms which have announced managerial stock incentive plan.Secondly, This paper investigates the influence of managerial stock incentives on the performance of the company. The paper finds that before accounting for earnings management, managerial stock incentives have positive influence on the performance of the company. But after accounting for earnings management, the positive influence becomes statistically insignificant.These findings in this paper indicate that managerial stock incentives did not have positive influence on the governance of the company. The reason is that the listed companies in our country are lack of supervision. So, this paper proposes some relevant policy recommendation to improve the influence of managerial stock incentives.