Research On Earnings Management Of Equity Incentive In Listed Companies

Equity incentive mechanism is an effective compensation incentive mechanism based on principal-agent theory and optimal contract theory.It gives the operator a certain degree of control and residual claim,so that the operator also becomes the actual owner,and share the benefits and risks with the company's owners.In order to enable management to eliminate short-sighted behaviors in daily operations,maximize the shareholders' equity and the maximization of the company's value as the main basis for their business decisions,thus giving the company management a kind of access to corporate equity in equity incentives.Form of economic rights.Enterprises will set certain goals in their equity incentive plans.When management completes setting goals,they will be able to obtain corresponding equity,and after they have successfully exercised their rights,they will receive the corresponding equity incentive income.Earnings management is the process of corporate management through the choice of different accounting methods or non-accounting methods to manipulate the company's operating performance,whitewash corporate financial data,and control corporate financial reporting disclosure.Management's earnings management behavior will induce the company shareholders and other stakeholders to misunderstand the company's financial status,operating results and cash flow.The original intention of equity incentive design is to encourage the management of the company so that it can serve the company's long-term development with due diligence.However,in the actual use of equity incentives by listed companies in China,executives in order to achieve the conditions of access and obtain High returns often result in a series of earnings management actions in equity incentives,which not only harm the interests of the company,but also damage the interests of the company's shareholders and investors.Therefore,the research on the earnings management behaviors of the management before and after the implementation of theequity incentive plan of listed companies in China,and the analysis of the causes and harms of the management of the earnings management of the company's managers,and the measures and recommendations for regulating the equity incentive plans of listed companies in China are proposed.It not only has theoretical significance but also has strong practical significance for listed companies in China.This article chooses Jinyi Building Decoration Co.,Ltd.as the research object,and adopts the literature research method,case analysis method,and the combination of qualitative and quantitative methods to increase the net profit of the 2006-2016year-on-year financial statements.Based on the analysis of the proportion of recurring profit and loss to net profit and the trend of stock price changes from 2006 to 2016,it was found that management of Jinhan Group had surplus management behavior during the implementation of its first stock option incentive plan,and pointed out that Jinhan's management conducted The means of earnings management are: the management of the company may use the BS model to reduce the equity incentive expenses in equity incentives,reduce the exercise price by continuously diluting the company's shares through dividends,and adjust the non-recurring profit and loss items and reduce the Rights standards for earnings management.The analysis shows that the management of the company adopting surplus management in equity incentives is to improve the business performance of the company in order to comply with the equity incentive exercise conditions,lower the exercise price and suppress the stock price so that it can exercise the right to obtain equity incentive income,and reduce the The right to pay personal income tax to maximize its capital gains.This article analyzes the means and harms of management of earnings management by Jinhan management in equity incentives,and then puts forward the countermeasures and recommendations for standardizing the equity incentive plan of listed companies in China: The Chinese government should strengthen the guidance of policies and the improvement of policies and regulations;The supervision and punishment of corporate finance fraud,etc;through the establishment of a standardized market environment,strengthen the information disclosure system,anddo preventive work from the government level.China's listed companies should expand corporate supervision,form an effective supervision mechanism;design reasonable performance evaluation indicators,pay attention to the assessment of long-term performance;reasonably set the exercise price of equity incentives and must not arbitrarily change;extend the equity incentive waiting period and limit sales Period,etc,to reduce management short-sighted behavior.Through researching and explaining the earnings management in the Jinrong equity incentive plan,it provides some reference opinions for the Chinese government and listed companies on how to make equity incentives.