Research On The Influence Of Executive Compensation Incentive On Earnings Management

Agent conflict between agents and agents due to information asymmetry exists in Chinese listed companies is very common.In order to solve this agency problem,the listed company constructs a salary incentive contract with the earnings index as the criterion.It links the interests of shareholders with the interests of executives during the contract period,which makes executives improve their performance while pursuing their personal interests.However,due to the nature of executives' rational economic man and the imperfect salary incentive contract,executives may ignore the company's interests,and conduct earnings management activities that pursue individual interests.Although earnings management can be considered as a reasonable management act to a certain extent,excessive earnings management will lead to the reduction of the authenticity of the information,and the information users will be misjudged.This will not only disrupt the market order,hinder economic development,but even affect other areas beyond the economic sphere,which will eventually lead to chaos in the entire capital market.At the moment of pursuing sustainable social and economic development,corporate social responsibility has become a hot issue.Stakeholders as a foundation of corporate social responsibility,management needs more consideration in making decisions to ensure that their interests are not compromised.However,it is not uncommon for management to make use of the advantages of their own information for earnings management,which is contrary to the basic points emphasized by corporate social responsibility.So,in the enterprise is asked to increase the importance of social responsibility under the environment,the company will be the interests of stakeholders and adjust the management structure? Then will it affect the level of earnings management?This paper takes Shanghai and Shenzhen A-share listed companies from 2013 to 2016 as the research object.After screening a total of 4397 samples were obtained.With stakeholder theory,information asymmetry theory and incentive theory as the theoretical basis,the empirical research method is used to explore the relationship between executive compensation incentives,corporate social responsibility and earnings management.And to establish a research model of corporate social responsibility as an intermediary variable,and analyze the role of the path.The research shows that the monetary compensation incentive positively affects the accrued earnings management and negatively affects the real earnings management.The stock option incentive and the accrued earnings management and the real earnings management all show an inverted U-shaped relationship.Monetary compensation incentive positively affects corporate social responsibility,equity incentive and corporate social responsibility is U-shaped relationship;Corporate social responsibility is positively correlated with accrued earnings management and negatively correlated with real earnings management;And corporate social responsibility plays an intermediary role in monetary compensation incentives and earnings management as well as equity incentives and earnings management.Finally,based on the empirical results obtained in this paper,we put forward the corresponding policy recommendations,that is,optimize the compensation incentive contract for senior executives,and timely modify the contract according to the needs and changes in the environment,that is,increase the importance of corporate social responsibility,social responsibility better integrated into the management of the company;increase the publicity of corporate social responsibility,strengthen the supervision of the corporate social responsibility information disclosure,establish reward and punishment systemimproving relevant laws and regulations on social responsibility and step up supervision by regulatory authorities;strengthen internal and external supervision and improve relevant accounting regulations.