Research On The Efficiency Of The Executive Compensation Incentive On Accounting Conservatism

With the continuous development of economy and the progress of technology, the uncertainty of accounting information is gradually increased. Based on their own interests, the enterprise's economic stakeholders will require companies to provide more robust and real accounting information to meet the needs of its own investment. Because internal staff master too much information, especially senior executives, they shall have the duty to provide more prudent accounting information to the enterprise internal and external information users. Executives, however, for their own interests, in order to chase high reward that is associated with performance, will make the following two aspects response:on the one hand, work hard and improve enterprise operating performance, keep their own goal is consistent with the enterprise shareholder goals, finally to maximize their own interests; On the other hand, in order to seek higher pay, senior executives will whitewash the accounting profit of the enterprises through earnings management or by overstate assets and income, underestimate liabilities and expenses to.Based on the above background, this paper, in the view of ownership, research the relationship between executive pay, pay gap and accounting conservatism, to verify that the executive compensation or executive pay gap will affect the enterprise accounting conservatism. After the empirical analysis, we found the following conclusions:First, the significantly negative correlation between executive compensation and accounting conservatism, and compared with the non-state-owned enterprises, state-owned enterprises are more obvious. The results show that with the increase of the level of executive pay, its reverse of executive incentive effect are also enhanced, at this point, the enterprise has the weak accounting conservatism; Second, executives - executives pay gap significantly positively related to accounting conservatism, and compared with the non-state-owned enterprises, state-owned enterprises are more obvious. The results show that the bigger the executive pay gap within the senior executives team, the executives play a positive incentive effect is stronger, at this point, the enterprise has stronger robustness of accounting; Third, the significantly negative correlation between executives-employee compensation gap and accounting conservatism, and compared with the non-state-owned enterprises, state-owned enterprises are more obvious. The results show that the outside executives conference negative incentive to executives, at this point, the enterprise has a weak accounting conservatism.