Confirmation Of Stock Option Expense And Earnings Management

China Securities Regulatory Commission issued in2006,"Equity Incentive listed companies management approach" prelude equity incentive reform, more and more listed companies have launched their own equity incentive plan. Theory and practice show that equity incentive easily lead to earnings management. According to "share-based payment accounting standards", expensing stock options to deal with, then confirm the stock option expense will not affect exercise performance conditions because of induced earnings management?Are the Yang Guang Cheng Company Through case studies will confirm the cost of stock options vesting performance conditions because of the impact caused by earnings management. Research papers by non-recurring items in2012Yang Guang Cheng before and after the introduction of stock option plans, management fees and other indicators of trends, to examine whether there is Yang Guang Cheng of earnings management. The study found that in the year prior authorization in2011, accruals project is three times the previous year;2012non-recurring items increased by176times compared with2011;2011administrative expenses increased compared to the previous year1.65times. The above data show that the implementation of the Yang Guang Cheng of earnings management, to exercise performance indicators, avoid the impact of stock option expense for the vesting conditions.Conclusions of this study tells us to confirm stock option expense will lead to earnings management, in order to prevent this situation, the government should support and promote the building of the stock option system; should establish tax incentives to encourage long-term holders of stock options; should be strengthened in stock review of accounting Information option expenses recognized for the year.