A Study On Ownership Structure, Executive Compensation And Earning-Management Of Listed Companies In China

Modern enterprise system prompt the development of enterprises, but principal-agent conflict is also intensified. The owner will sign compensation contracts with the managers.But limited by the information asymmetry, the degree of managers' hard-working can only be quantified by profitability, so compensation becomes an important motivation for earning-management. Principal-agent system makes managers can control the formation and disclosure of surplus information, accounting standards and relevant laws and regulations also give enterprise some choices of accounting policies and accounting estimates, these all make earning-management become possible.Although earning-management do not violate generally accepted accounting principles and related laws and regulations, managers adjust the current level of surplus to obtain private interests, this affects the authenticity and fair of current report, harms the interests of investors. So some measures must be taken. Equity structure, as the foundation of the company's internal governance structure, has supervision function, so it can have an impact on the earning-management.Based on the above analysis, I apply the data from 2007 to 2012 of A-share listed companies in our country to establish regression model. The empirical analysis results show firstly, the compensation motivated earning-management widespread in our country's companies. Secondly, the executives shareholding and institutional investors can significantly inhibit the compensation motivated earning-management. But ownership concentration and state ownership have negative impact on earning-management, they do not effectively inhibit compensation motivated earning-management. Finally, I find as the nature of the controlling shareholders terns from state and manager to domestic legal person and foreign legal person, the inhibitory effect on compensation motivated earning-management is gradually enhanced. These results indicate the direction for perfection the internal governance structure and improving the level of governance in our country's listed companies.