Equity Incentive And Earnings Management Of The Listed Company

Equity incentive is an effective way to solve the agency problems and reduce agencycosts.China Securities Regulatory Commission launched Stock Ownership IncentiveManagement Measures For Listed Company on January1,2006.The stock ownershipincentives that the listed companies of China carry out for their management layer has startedfrom then and has been developed quickly..The governance structure of listed companies wasfurther improved, and equity incentive makes the management and shareholders of the listedcompany have more common interests and effectively reduce the principal-agent conflict. Butat the same time causes a series of problem,one of which is the generale presence of earningsmanagement in listed companies.This paper puts forward the hypothesis,from the perspective of stock ownershipincentive and based on the analysis of the present situation of the stock ownership incentiveand surplus management. Moreover,this paper takes forty-six Shanghai and ShenzhenA-shares companies which has been carried out actual stock ownership incentive for themanagement layer from2008to2011as samples for analysis. According to the study of therelationship between earnings management and the stock ownership incentive,the differencesbetween earnings management levels in different industry has been discovered.This paperfinally draws the conclusion through the panel data regression:there exist a indistinctivepositive correlation between the stock ownership incentive for the management layer and thesurplus management. It also puts forward relevant policy suggestions based on the empiricalstudy results and combined with our country’s current situation.