Equity Incentive,Corporate Governance And Real Earnings Management

China Securities Regulatory Commission promulgated the Measures for the Management of the Listed Company Equity Incentive Plan in 2006. After the equity division reform, equity incentive system began to be implemented and promoted in the listed companies in our country. Increasing companies began to use equity incentive plans to balance the interests between the owner and operator, so as to achieve the purpose of effectively solve the principal-agent problem. But with the implementation of the plan, some problems also began to appear. Equity incentive vesting conditions brought about by the lucrative returns become one of the motivations of managers engaging in earnings management activities. The scholars also start to make researches on the relationship between equity incentives and earnings management. After the events of Enron counterfeit, due to the traditional accrual earnings management suffered greater constraints and supervision from Accounting Standards, management of listed companies began to use more covert real transactions for earnings management activities. Thus, this article mainly study the relationship between equity incentives and earnings management from the perspective of real earnings management and introduce corporate governance to explore any impacts on this relationship, so as to provide empirical evidence and reference for the perfection of corporate governance of listed companies and equity incentive system.Based on principal agent theory, human capital theory, information asymmetry theory, contract theory and other theoretical basis,This article used a combinational method of normative research and empirical research,by studying 2006-2014 Shanghai and Shenzhen A-share companies, marked 635 listed companies, which officially declared equity incentive plans by the end of 2014. Through empirical method, whether equity incentive system will cause real earnings management was firstly verified. On the basis of that study, the relationship between equity incentive level and the degree of real earnings management was researched, and then introducing corporate governance to explore whether the ascension of the corporate governance level can effectively restrain real earnings management activities induced by equity incentive. Lastly, making comparison of the effect on real earnings management between stock options and restricted stock, which are two different models often used in equity incentive system. Finally the conclusion of research mainly has the following points:(1) whether or not listed companies announce equity incentive plans has a significant positive correlation to real earnings management, that indicates the equity incentive plan will induce the company management for real earnings management activities.And in the case of other conditions limit, equity incentive intensity and real earnings management degree has significant positive correlation.(2) After introducing the level of corporate governance, it is found that under the different level of corporate governance,the equity incentive has different effects on the real earnings management,and improves the level of corporate governance can effectively reduce the relationship between equity incentive and real earnings management.The main body of this article is organized as follows:Part One summarizes the overall research idea, content, significance, innovation points; Part Two defines concepts which may be involved in the research, and then simply introduce the relevant theory of equity incentive and real earnings management, combs domestic and foreign related research literature and; Part Three discusses the reason of equity incentive causes of real earnings management and then mainly contains research design and empirical analysis, on the basis of above literature review and summary of theoretical research, according to the research content and train of thought in this paper, propose the research hypotheses, build the regression model;Part Fou uses Excel, SPSS and Eviews software for data processing and then get the empirical results to verify this hypothesis;Part Five according to the results of the empirical analysis in this paper, it finds out the research conclusion and makes targeted suggestions for equity incentive system and the governance of listed companies, finally summarizes the deficiency of this paper and prospects the future research.