Research On The Effect Of Executive Incentive On The Quality Of Earnings Forecast

Many theoretical researches and empirical evidences show that,Information Disclosure System play an important role in alleviating the information asymmetry problem and agency conflict it caused between managers and investors of listed companies.On the one hand,information disclosure can solve the information asymmetry problem and strengthen the supervision.On the other hand,it can also be used for information cheating by lists managers.Earnings Forecast in the form of forward-looking financial information disclosure,as one way to forecast company's future status of profits,is full of uncertainty.Though precise Earnings Forecast can improve significantly the decision-making usefulness of financial information.Because of the uncertainty of Earnings Forecast and the imperfection of Earnings Forecast system,it's easier for lists managers in our country to control Earnings Forecast information.Here we all know that under a company's managing system,executive incentive is an efficient way to reduce executives' self-conducting act and alleviate the agency conflict.So do executives avoid self-conducting act and tend to improve the quality of Earnings Forecast after the incentive.There is some theoretical and practical significance of Analysis and thinking about this question.In this dissertation,we-investigated-executive-equity incentive's and executive compensation incentive's influence on Earnings Forecast' accuracy,precision and timeliness.On the basis of research literature at home and abroad and theoretical analysis,we used 2010-2015 Earnings Forecast data of A-share listed companies in our country as the research sample,used multiple regression analysis method,tested the executive compensation incentive and executive equity incentive impact on the quality of earnings forecast.As for the conclusion of this dissertation,first,the Share Proportion the executives have has a positive correlation to the quality of Earnings Forecast.The more Share Proportion the executives have,the more precise Earnings Forecast are.The more timely the information is disclosed,the more positive influence the executive equity incentive have on the quality of Earnings Forecast.The more Share Proportion the executives have,the more probably they choose the behavior that benefit shareholder's side and the more useful the information of Earnings Forecast is for investor's decision-making.Second,the executive's compensation has a positive correlation to the quality of Earnings Forecast.The higher their compensation is,the more precise Earnings Forecast are.The more timely the information is disclosed,the more positive influence the Executive compensation incentive have on the quality of Earnings Forecast.The higher their compensation is,the more efficient Earnings Forecast will be.And the more useful the information of Earnings Forecast is for investors' decision-making.Third,when the information of Earnings Forecast come to be a good news,the executive incentive has more incentive effect to the quality of Earnings Forecast,in other words,good news can strengthen the effect from the executive incentive to the quality of Earnings Forecast.The main contribution of this dissertation in two aspects,first,based on the short-term and long-term characteristics of executive incentive,we researched executive incentive effect on the quality of earnings forecast respectively from executive compensation incentive and executive equity incentive,which expanded the scope of study on factors affecting the quality of earnings forecast and enriched the literature in the field of executive incentive and information disclosure;The second,the study of executive incentive effect on the quality of earnings forecast conducive to improve the quality of earnings forecast and perfect the operation mechanism of capital market and the executive incentive mechanism,it also can provide the beneficial reference for investors to analyze the value of the company,for strengthening the management of listed companies and making relevant policy.This dissertation consist of five parts.The first part is a brief introduction of this research's background and values,which review the papers about executive incentive and Earnings Forecast all over the world.It also mention the research thought,research approach and creation of this dissertation.The second part mainly define the key words like executive incentive and Earnings Forecast,and also explain the basic theory such as information asymmetry theory,principal-agent theory and Signaling Theory.The third part is about theory analysis and research hypothesis,we first give a description the present situation about the Earnings Forecast and executive incentive in our country,then clarify the executive incentive's influence mechanism on the quality of Earnings Forecast from two sides(executive equity incentive;Executive compensation incentive).Based on these we give the birth to research hypothesis of this dissertation.The forth part is the empirical test.In this part,we first give the model design and define the variable.And we choose the A listed company's data(2010-2015)as the sample to research employing multiple regression analysis and Statistical software like SAS?EVIEWS to do the test.The fifth part give the conclusion and propose to policy in our country.At the same time we point out existing deficiency in researching and prospects.