Empirical Research Of The Relationship Between The Executive Equity Incentive And Earnings Management Based On The Key Point

In order to solve the questions such as principal-agent theory,asymmetric information theory and so on,there are many countries using equity incentive as a kind of effective incentives.Since 2006,China has issued the listed company equity incentive measures for the administration enforcement.However,as the equity incentive constantly expanding the scope of implementation,it produced a series of financial scandals.That is because if managers achieve the equity incentive plans,they can bring generous benefits,this phenomenon may be the one of the earnings management's motivation.This paper hope making suggestions during using equity incentive plans by r esearching about relationship between equity incentives and earnings management.This paper hopes maximizing the positive effect of equity incentive and restraining the effect of negative influence from equity incentive.This paper sorts out the research of the predecessors on the relationship between equity incentive and earnings management in the part of literature review.We found that previous scholars ignore the key point,so this paper hope research the relationship between equity incentive and earnings management through multiple point and multiple aspects.This paper combine the principal-agent theory,human capital theory,contract theory,asymmetric information theory,interests convergence efficiency and opportunistic behavior benefit theory as the theoretical basis.We comprehensive three key points and two research aspects: accrued earnings management and real earnings management features from performance assessment period and after assessment period,the company earnings management factors affecting the implementation of equity incentive in our country in two key points.We use three research methods such as the literature search method,Deductive reasoning method and Combination of qualitative and fixed.The paper comes to the conclusion by collecting data,Descriptive statistics,Pearson correlation analysis,multiple linear regression method to establish model: be order to realize the maximization of management self-interest,it will be negative real earnings management in a year prior to the release of the equity inventive plan,it w ill be positive real earnings management after one year of the equity inventive plan;the real earnings management during equity incentive's year is more significant than it during waiting period/lock-up period;there is positive correlation between accrued earnings management and real earnings management during equity incentive's three key point;performance to achieve the target is significantly positive correlation with accrued earnings management and real earnings management in equity incentive year,performance to achieve the target is positive correlation with accrued earnings management and real earnings management after waiting period/lock-up period,but relations are not significant;the validity of equity incentive,performance evaluation criteria,equity incentive mode,the number of equity incentive effect earnings management is more significant during equity incentive year than it during waiting period/lock-up period,In the following pages,the above conclusions are verified by robustness test again.By the addition of three key points,this paper is more clear show the relationship between equity incentives and earnings management on t he time dimension,according to the results of empirical research,this paper puts forward the corresponding suggestions from four aspects such as Internal governance structure of listed companies,equity incentive schemes and performance examination system,the manager market,external capital market supervision standard regulation.This paper hopes contributing to the implementation of equity incentive,so we can make it more smoothly in China.