A Study On The Effect Of CEO’s Compensations, Equity Nature To Performance Self-serving Attribution

Self-serving attribution,specifically defined as explaining positive performance to internal causes(such as strengthened internal control or optimized product structure)and negative performance to external cause(such as macroeconomic fluctuations or competition of industry),is considered as a common behavior of accounting information disclosure manipulation(Salancik&Meindl,1984;Clapham&Schwenk,1991;Aerts,2005;SUN Manli et al.2005;JIANG Yapeng 2008).Studies also show that self-serving attribution does have a supporting effect on stock prices,and certainly affect investors’ decision-making behavior(Bowman,1976;Staw et al.1983;Baginski et al.2000;JIANG Yapeng 2009;SUN Manli 2013).With the later start but rapid development of capital market in China,the problems that traditional disclosure mechanisms,based on the amount of information,have been difficult to meet the requirements to the huge fluctuations causing by the companies,value creation process.In addition,due to inefficiency of the law system and the internal control,some companies even manipulate information disclosure to gain more personal profits.However,compared to earnings management,self-serving attribution is more difficult to perceive because of its manipulability and confidentiality.Therefore,some scholars and related law makers started to pay close attention to research the motivations of self-serving attribution information disclosure,and restrain it from the source.By selecting representative 140 companies,listed in Shanghai and Shenzhen stock markets A-share,and based on the attribution theory,agency theory and "The content and format of information disclosure of companies issuing securities No.2:Contents and formats of annual report(revised in 2012)",using content analysis,this paper studied the influence factors of self-serving attribution.We found that:(1)self-serving attribution is almost universal.Companies prefer to explain positive performance to internal causes and negative performance to external causes,regardless of how the company performs.(2)the higher CEO compensations,the higher level of self-serving attribution.As the direct participant in the process of annual report disclosure,CEO has the ability to handle and process performance attribution through his own information superiority,in order to consolidate and improve their position in the company,and gain higher compensations.(3)There exists significant different strategies on how to gain higher compensations by using self-serving attribution between state-owned-enterprises and non-SOEs.Because of the absence of ownership,politic promotion and strict regulations,the motivations of self-serving attribution are lower in state-owned-enterprises.(4)More power of CEO leads to higher self-serving attribution.CEO prefer to gain higher compensations through self-serving attribution as power rises.The main originalities and contributions of this paper lie in:This paper attempts to broaden the application category of attribution theory,and also proved the phenomenon that CEO uses self-serving attribution to gain higher compensations,and there are significant differences between different state-owned-enterprises,and enrich the literature about motivations of self-serving attribution.Besides,in accordance with the research conclusion,this paper presents some relevant policy recommendations from four ways,including improving accounting information disclosure standards,comprehensive compensation management system,audit quality and external supervisions,and internal control.