Research On Impact Of Management Incentives On Real Earnings Management

As an indispensable component of modern corporate governance structure,management incentive mechanism has been widely concerned by theorists and practitioners, such as its methods, content and implementation impact. Although management incentives have played a very positive effect on corporate governance, we should focus on the impact of the various ways on real earnings management. Because of the separation of ownership and controlling rights, the owners and managers stand on different angles and their profit motivations are different. It will change the accounting earnings by managers’ behavior of manipulating activities to hinder the healthy development of enterprises. However, most researchers focus on the relationship between management incentive mechanism and accrual earnings management, while ignoring another quietly but more serious earnings management--real earnings management. In fact due to the gradual improvement of the accounting system and strengthening supervision of relevant departments, accrued earnings management to manipulate earnings just by adjusting accrued items, its operable field receives more and more restrictions, the risks is also higher and higher, and therefore the managers inclined to management by scheduling real business transactions to manipulate earnings,so that all transactions with the various normal elements, its accounting treatment in line with the requirements of generally accepted accounting principles, and therefore have a greater covert. Although such earnings management behavior cause enterprises to obtain temporary profits, but harm its long-term development capacity. Therefore, research on the relationship between various ways of management incentive mechanism and real earnings management has very important significance.This paper selects real earnings management of listed companies as the research object and 2012--2014, China’s Shanghai and Shenzhen A-share listed manufacturing companies as sample. Discuss the relationship between the management incentive and real earnings management activities by theoretical and empirical analysis and investigate the influence and consequence that various forms of enterprise’s earnings management played on real earnings management. The results found that the monetary incentive compensation management and real earnings management is negatively correlated; management equity incentive and the real level of earnings management is positively correlated; management perks incentives and real earnings management was "U" shaped relationship. Finally, according to the results of theoretical and empiricalresearch, this paper will provide some constructive opinions and suggestions for the listed companies to formulate, implement and improve management incentive mechanism in order to maximize the reduction in real earnings management of the listed companies, and then provide stakeholders real value information and promote enterprise better and more stable development.