The Study Of The Relationship Between Equity Incentive Mode And Earning Management About Listed Companies In China

Equity incentive is a kind of incentive method, which use the listed company’s stock as incentive object, makes managers responsible for the company’s long-term operation and make contribution. It linked the enterprise operation performance and the operator’s remuneration directly by the Compliance Agreement or contract in which the specific implementation mode, progress, amount and so on are clearly defined, so that they can participate in decision-making, sharing profit and risk as shareholders.The system is a remuneration system to inspire the managers. Because it linked the managers reward and the market value of the company together, then reduced the agency cost, increased the social welfare, so it was respected by the western countries led by America.Since1920s, it spread gradually in the world and gradually came to China, Listed companies in China such as those in Beijing, Shanghai, Wuhan and other places were the first to accept equity incentive system But the majority of these enterprises were almost mature industries, such as high and new technology industries.Time flies, now look at today’s China, various industries listed companies have adopted and gradually expand the scope of application of the equity incentive system, and there have been many wonderful cases. Not only the mainstream mode of mode, phantom stock, cash stock appreciation rights and other less-mentioned mode is also widely used.On the industry, not only high-tech industries, real estate, food processing, manufacturing, heavy manufacturing and processing, and even securities and financial industries also actively have this plan. At the beginning, scholars at home and abroad studied the system itself but now they have a deep research.The same time, from the variety of financial magazines, you can find that many of the listed companies use equity incentive system to having earnings management. Earnings management discussed in this article refers to:managers in order to seek personal interests, for example, to get more loans or getting a good performance data to change the report. In recent years, corporate governance issues, the professional managers in China market is not standardized, imperfect and our credit environment of the accounting policies and financial regulations are too broad...these things filled in major financial forum sections。Throughout the articles, however, most of them are talking about the entire equity incentives and earnings management,and the results are less time-sensitive, especially in recent years of China, and they have less idea about the difference between state-controlled listed companies and non-state-controlled listed companies. The significance of this study is to attempt to clarify the relationship between equity incentive model and earnings management, and have a depth analysis on this basis to give comments and suggestions to the standard-setters about equity incentive to better regulate our earnings management, and improve China’s listed companies equity incentive plan programs at the same time, enhance the reliability and relevance of accounting information of listed companies in China.The research method in this paper combined the normative and empirical research method, the qualitative and quantitative research method. The paper is divided into several parts. The first part is the introduction section which clarified the writing background, raised the study issue.The second part summarized the point of view on the equity incentive, especially between equity incentive model and earnings management from a large number of articles and books including domestic and foreign research. On the basis of literature review, the specific meaning, features, applicability and differences on different incentive mode, as well as the meaning of earnings management and its theoretical basis are described in the chapter, laid a theoretical foundation for the empirical research in chapter four.Then the empirical part use the cross-section modified Jones model with the statistical software "Eviews". The third section analyzes the empirical findings and put forward feasible suggestions. The last part of that is a summary and outlook.The frame can be understood like this:first of all is giving the introduction of the background and the theme. Then entering the second session, that is theoretical and empirical analysis. The third link is to combine the analysis of the results of empirical research, and try to put forward constructive ideas, and the last one is a summary and outlook. The whole route is having questions-analysis of the problem-and solving the problem. The innovation of this paper is the following:1. The research data based on the2010and2009,under the background of full circulation which out of the financial crisis, relative to the previous articles with certain timeliness.2. The paper have a more detailed and depth point of view. This study compared the strength of earnings management between the modes, and give a divided of enterprise nature.3. Giving innovative proposals.There are still many things are worthy of further study, such as model selection, variable design aspects research and so on.