Impact On Executive Behavior Of Listed Companies Incentives

As an effective long-term incentives system, equity incentives can make the interests of executives and shareholders of the listed companies to be linked closely, in order to allow executives to focus on long-term development of the company. The successful use in Western developed countries prove that equity incentives play a positive role in improving the corporate governance structure, reducing agency costs and so on. With the gradual improvement of relevant laws and regulations of China’s equity incentives, there are an increasing number of listed companies preparing for equity incentives. However, in recent years, executives’ self-interested behavior came out one after another during the equity incentives implementation process. While affirmed the equity incentive’s positive role, we also can not ignore its negative influence. So it is necessary to study the relationship between equity incentives and executives’ behavior of listed companies.This paper studies how equity incentives impact on executives’ behavior of listed companies. At the first, we reviewed some related study, both domestic and foreign ones, and then we introduced the basic theories of the equity incentives briefly. After that we introduced the situation of the equity incentives of China. Then we studied the equity incentives of listed companies impacting on executives’ earning management, accounting fraud and stock price manipulation, by using empirical and theoretical research methods respectively. We took the listed companies who had issues the announcement about the equity incentives plans as our study sample in2011,and took their annual report and related announcements as the information resources. Through careful selection, we finally got one hundred and twenty-two effective sample companies. We made use of the SPSS17.0statistic software to analyze the model. We concluded that the equity incentives of listed companies of China has a certain degree stimulation to executives’ earning management, and the degree of equity incentives and the value of the granted stock have a positive influence to earning management. In addition, the scale of the companies’ assets and the net return on assets will have a certain impaction on executives’ earning management.Furthermore, we used the companies which were published publicly for their irregularities from2009to2011, with the use of statistical analysis and game theory. The final conclusion is as follows:Listed company equity incentives can induce executives’accounting irregularities in a certain degree. And the incentive model of stock option is more likely to lead to the generation of executives violations. Regulatory departments increasing the penalties can help to reduce the executives’irregularities. It has a practical meaning for revealing executives’irregularities, improving the governance structure of listed companies, and strengthening the supervision of listed companies. At the same time, it provides a certain amount empirical evidence for listed companies for developing scientific and rational equity incentive programs.