Study On The Correlation Between Executive Incentive,Internal Control Effectiveness And Earnings Management

The problem of information asymmetry and agency cost is a difficult point in the operation of joint-stock enterprises,and executive incentives have emerged.However,the problem of excessive earnings management caused by improper executives incentives has also gone through,and even developing into financial fraud,which has caused irreversible adverse effects on the securities market and investors.Internal control is an effective governance mechanism to ensure compliance,legal and efficient operation of the company.The degree of perfection may not only affect the efficiency of management and operation within the company,but also affect the management of earnings management.Based on this,it is necessary to study the correlation between executive compensation,internal control effectiveness and earnings management.Firstly,this paper systematically sorts and summarizes the relevant literatures on the relationship between executive incentives,internal control effectiveness and earnings management at home and abroad by using normative analysis method,analyzes relevant theoretical knowledge and defines the correlation of three main variables.concept.Then,on this basis,the relevant assumptions of the relationship between the three variables are proposed through theoretical analysis.After the hypothesis is put forward,the data of Shanghai A-share listed company's A-share listed companies from 2012 to 2017 are selected as sample data.Excel and Stata software are used to verify the relationship between executive incentives and earnings management,and the effectiveness of internal control.The regulation of the relationship between the two.Secondly,the article summarizes the research conclusions.The research confirms that the “performance” and “power” executive incentive models can induce earnings management,and the “equity” executive incentive model can inhibit earnings management;the higher the effectiveness of internal control,The lower the degree of earnings management induced by the “performance” and “power” executive incentive models,the higher the degree of “shareholding” executive incentives to curb earnings management.Finally,based on the research conclusions and the actual situation of listed companies,this paper puts forward some suggestions from the aspects of executive incentive program setting and internal control construction,in order to provide a useful reference for enterprises to further improve the earnings quality and enterprise value.The innovation of this paper lies in: taking China's 2012-2017 Shanghai A-sharelisted company as a research sample,from the executives to encourage “performance”,“power” and “equity” models to encourage listed companies to executives The relationship with earnings management was further studied and introduced,and the effectiveness of internal control was introduced as a regulatory variable.However,due to its own research ability and data availability limitations.