Executive Compensation Restrict,Internal Political Governance And Earnings Management In State-owned Enterprises

Political governance refers to the corporate governance embedding corporate political behavior.Under the established political institutional environment,the combination of corporate governance and corporate micro-political behavior forms an institutional arrangement that is an important part of corporate governance.In the context of the political system of "the unity of the party and the government" in China,the company law and the party constitution establish the legitimacy and leadership of the party organizations in state-owned enterprises.Therefore,the study of the internal political governance of state-owned enterprises should be based primarily on the participation of grass-roots organizations of the Communist Party of China in stateowned enterprises.Corporate governance of the company.This is of great significance for improving the governance of modern state-owned enterprises with Chinese characteristics and consolidating and developing the leading position of the party organizations.Moreover,the theory and practice of internal political governance in state-owned enterprises need to be further addressed by how to transform the political advantages of party organizations in state-owned enterprises into the institutional advantages of corporate governance and their competitive advantages in the marketoriented competition.Financial statements are the barometers and transcripts of companies.How about the quality of their accounting information—that is,the extent of earnings management,can provide us with a window of observation.Can we glimpse the effects of internal political governance in state-owned enterprises? Remuneration incentives are one of the most primitive and instinctive motives for management of earnings management.It is easy to link it with earnings management.Due to the special nature of the property rights of state-owned enterprises,the party and the state pay the remuneration of central enterprises and state-owned enterprises several times.With regard to reforms,regulation,and restrictions,how will those leaders of state-owned enterprises with the dual status of “top executives + senior executives” perform on the issue of earnings management? Will the internal political governance of state-owned enterprises affect this relationship?This article takes the sample of state-owned listed companies in Shanghai and Shenzhen from 2007 to 2015 as a sample,examines the relationship between internal political governance and earnings management in state-owned enterprises,and further examines the internal political governance of state-owned enterprises by taking the constraint of executive compensation of state-owned enterprises as the entry point.How it works-that is,whether the level of internal political governance in state-owned enterprises will have an impact on the relationship between executive compensation constraints and earnings management.The following conclusions have been drawn: 1.There is a significant correlation between internal political governance and earnings management in state-owned enterprises.The higher the degree of internal political governance of state-owned enterprises,the more they can inhibit the level of management of earnings management.This conclusion also applies to the three subindicators of internal political governance in state-owned enterprises.Among them,the Party organization's participation in the governance of the board of directors and earnings management has the highest level of significance.The relationship between party organizations' participation in the board of supervisors' governance and earnings management is not as significant as the overall indicators and other sub-indicators.2.The greater the constraints on the executive compensation of state-owned enterprises,the more they can inhibit the level of management of earnings management.The constraints and restrictions on executive compensation of state-owned enterprises are mainly reflected in the positive correlation between internal wage gap and earnings management.Domestic scholars have tested and proven this relationship and have reached a more consistent and steady conclusion.However,in order to ensure the rigor and integrity of the empirical test in this paper,the relationship between executive compensation constraints and earnings management of state-owned enterprises was reverified.The results show that it is consistent with the conclusions and empirical results of most domestic scholars.3.The level of internal political governance in state-owned enterprises has an impact on the relationship between executive compensation constraints and earnings management-that is,in state-owned enterprises with high level of internal political governance,the greater the constraints on executive compensation,the more they can curb management earnings management.Degree.In turn,the three sub-indicators of internal political governance in state-owned enterprises were tested,which is the same as the conclusion of the overall indicator.Among them,party organizations participate in the board of supervisors governance.* Executive pay restrictions and earnings management are significantly negatively related,but the effect is less obvious than participation in board governance.Party organizations participate in management governance * The significance of the relationship between executive remuneration constraints and earnings management is slightly less than that of participation in the governance of the board of directors.Political governance belongs to the category of political studies.Corporate governance belongs to the category of economics research.Both follow different logics of evolution and have different research “road maps”,which are two distinct systems but run on the same carrier(enterprise).The institutional background and historical evolution with Chinese characteristics have created conditions for the coexistence of internal political governance and modern corporate governance systems,and have finally been confirmed in the form of laws.At present,there are few literatures on the participation of party organizations in the internal political governance of state-owned enterprises,and they mainly focus on conceptual definition and theoretical combing.They are rare for path research and empirical tests,and the evaluation and attitudes of current academic and practical circles on the content are also mixed reviews.The above conclusions are conducive to the formation of useful supplements to the relevant literature,to respond to the requirements for strengthening party building in the reform and mixed reform of state-owned enterprises,and to make a scientific assessment of this.The use of executive compensation constraints as a breakthrough point for further analysis helps to test the phased results of the reform of the government's pay system,to improve the integrity of the party's work style and clean governance,and to gauge the “party cadres”;to curb the management's surplus from the perspective of internal corporate governance.The degree of management and improving the quality of accounting information in the securities market also have certain value.