A Study Of The Relationship Between The Public Companies’Management Incentive Equity And Earnings Management

According to the theory of modern corporate system and the years of practical research aboard, listed companies implementing equity incentive plans, corporate structure of modern governance is an important measure. It plays a positive role in increasing the management efficiency of the company, reducing the principal-agent cost and decreasing the probability of moral hazard and maintaining investors’benefits. Since2005, our company have set up a comprehensive, feasible and scientific evaluation system for the standardization of the option incentive system, what’s more, the passion where listed companies implement the plan of share motivation has been inspired since2006. However, because of having its own characteristics, stock option incentive plan has a dual outcome. If the plan is well executed, the company would achieve the desired result, whereas if the plan is not well executed, the company would achieve the desired result, whereas if the plan is not well executed. It would not only create new moral risk, but also seriously disturb company’s future development. While in China, for the limitation of law system, employee stock options being used by the listed companies have led to many problems especially earnings management which based on the share motivation of listed company.On the basis, the paper discusses the relationship between the earnings management and the share motivation of listed companies in agent mechanism and human captial. This paper makes an empirical analysis on the main factors influencing the relationship between the earning management and the share motivation of listed companies according to the sample data of84listed companies during2009-2011. Through qualitative research and quantitative research. This thesis has come to the following conclusions:1. The empirical results find some evidence that the Chinese listed companies existed earnings management behavior.2. The percentage of top management shareholding has significant positive correlation with earnings management degree.3.At the same time, the proportion of the independent director, the large shareholders’holding and the corporation size have positive correlation with earnings management degree.4. The correlation of the period of validity, achievement evaluation index and asset-liability ratio with earnings management degree are not significant.The structure goes as follows:Firstly, the part of introduction presents the meaning of this paper, the current research status and existing problems in this field, and the theories and methods applied by author. Secondly, in the part of theory analysis, based on the literatures of scholars at home and abroad about the cost of capital, this thesis combs and summarizes the relevant theories. Thirdly, the empirical part confirms the game model which majorly analyzes the main factors influencing the relationship between the earnings management and the share motivation of listed companies.At the end of the article, the author gives some suggestions to solve the problems of market environment, which are meaningful to the effective implement of stock-based incentive strategies.