The Effect Of Equity Incentive On Accounting Reliability

Since2006,the China securities regulatory commission has issued the listed company equity incentive measures for the administration enforcement, equity incentive in our country has entered a new stage of development, especially after2009. As experience and understanding of the listed company equity incentive growing, the implementation of equity incentive of the number of listed companies has had a rapid growth,and by2013,the total number of the implementation of equity incentive has reached597. The implementation of equity incentive can increase the enthusiasm of management’s work in theory, share the profits with shareholders, and carry out their duties diligently to serve the company’s long-term development.However,it will also cause a harm to the company’s long-term development when the management regard it as a way to pursue their interests.Therefore, in recent years, the manipulation surplused by the listed companies of equity incentive plan has risen widespread attention from domestic scholars. This article will explore the behavior and ways of the earnings management based on the perspective of management equity incentive.This article selects the company that announced the equity incentive plans in2010-2011and the benchmark year for2010listed companies as samples.The aim is to figure out whether the sample companies in the equity incentive plan show the behavior of earning management and chose what methods of earnings management.Through the mean descriptive statistics, t test and multivariate linear regression, this paper found that the implementation of equity incentive of sample companies in the equity incentive plan carried out downward earnings management behavior in benchmark year in order to reduce the exercise performance criteria.After the equity incentive plan announced,they wound carry out the upward earnings in order to smoothly has the authority and improve the performance. At the same time,the sample company has the two kinds of earnings management behavior. Relative to accrued earnings management, managers prefer to implement real earnings management. As the degree of equity incentive is closely related to the interests of managers, the degree of equity incentive is associated with the degree of earnings management.And this paper also found that the ownership concentration and ROE are significantly associated with the degree of earnings management.The structure of this paper is arranged as followings:the first part of the paper introduces the background, significance and research framework of the research,;In the second part,we rewiew the literature of accrued earnings management and real earnings management, generalizes the present situation and the research situation of equity incentive;The third part analyzes the theory on the equity incentives and earnings management respectively,and put forward the hypothesis of this article;The fourth part introduces the model, variable selection and sample selection process;in the fifth part,we make an empirical analysis of the sample data through descriptive statistics, mean t test and multivariate linear regression;Last part is the research conclusion,suggestions, shortage and the outlook of this paper.