Managerial Power,excess Executive Compensation And Accounting Conservatism

During the financial crisis of 2007,while a large number of US financial institutions had suffered huge losses with the price of stock Slump and the market value shrunk. In this case the salary of companies’ executives has not been affected.The bonus of the Big five investment bankswhoseCEO’s salary had exceeded 1 billion, still break the record. Mr. Obamascolded Wall Street executives "high salaries shameful". The executive compensationof Chinese public companies has been much debated in recent years, since the phenomenon ofshy-high compensation of listed companies’ executives occurs frequently. Chinese public companies’ executives enjoy a high and stable salaries seems to have become an ordinary state. What is more, even if the company suffer a huge loss, the executivesshould receive high compensation.The unreasonable executive compensation has aroused widespread public concern.People questioned why the public companies’ executivescould get a unreasonable large salary.At the beginning of 2009, the central government had issued a series of policy document to constrain the soaring salary of SOE’executive, and had took coercive measuresto close the gap of salary between the executive and the employees.But the salary of executive in NSOE is still high.Implement the incentive for executives can reduce the agency cost of the enterprise.More and more companies choose an executive compensation contracts based on accounting earnings. Accounting earnings reflect executive level of effort is a decision important indicator of executive pay executives. In unpaid non-state controlled listed companies, executives in order to achieve the goal to maximize the benefits, there is motivation to manipulate earnings. Executives manipulated accounting earnings, whitewash financial information, will inevitably affect the quality of the company’s accounting information, accounting and earnings as accounting information quality characteristics will also be one of the robustness of executive remuneration to grab excess of. So, in the absence of compensation management of non-state-owned listed companies, executives grab over pay, how it affects the company’s accounting earnings robustness? Taking into account the different approaches of different intensity executive powers to obtain excess compensation; executive power under different intensity, grab excess executive pay, any difference between the robustness of the impact on the company of accounting earnings?Based on the above thinking, this article in 2008-2014 NSOE listed company data, from the perspective of executive power, studied the relationship between executive pay and over between accounting conservatism. In this paper, the surplus- based equity returns model, the extended model was constructed over pay, first tested over executive pay affects accounting earnings conservatism, and then examine the influence of excessive executive salaries for accounting conservatism in different the difference between the power intensity. Conclusion of this paper is: no pay regulated non-state enterprises, without considering the case of executive power, executive pay will be reduced to grab excess corporate accounting conservatism, and after considering the impact of executive power, the paper found that high pipe grab influence over the remuneration of accounting conservatism in different executive power intensity is different, specifically, only the executive power hours, the excess will pay big accounting conservatism executive powers when companies decreased in the high large tube power, the excess does not reduce the salaries of accounting conservatism enterprises.