The Effect Of Management Compensation And Contract On Real Earnings Management Of Listed Companies In China

As connect to the external stakeholders and internal management of the listed companies,the quality and authenticity of financial statements is particularly important.Due to manipulation of the profit will be great impact on the reliability of financial information,so when the earnings management appeared in the early 90s of last century,it has become the focus of the study.Traditional earnings management based on accrual items,but in recent years it has been affected by the impact of legal and guidelines update,its space also by has been severe compression,in this situation,real activities of profit management appeared,it cut down development spending to reduce costs,and reduced credit approval threshold to increased sales income,and excess production to reduced cost,and excessive investment and false trading,the damage was much bigger.According to the Agency theory,as for agent costs reduction,incentive was more obvious than supervision,and earnings management could be fundamentally resolved by reasonable incentive.However,scholars believe that the failure of incentives will induce management to manipulate earnings,for the purpose of reaching contract limited,produced a contract against incentives,increase agency costs at last.Therefore,it is necessary to study the compensation contract,how to avoid the failure of contract the incentive effect becomes the key to reducing losses.This research has established more detailed variables,take 2013-2015 for timing in the manufacturing sector as a demonstration object.There are some differences due to the nature of the work and interests,different management's response to the incentive is not consistent,we studied the effect of pay.As usual,people take the compensation of management into monetary compensation and shares available.In fact,Executive compensation also covers a large part of the invisible benefits,including on-the-job consumption,social status and political achievements.But in the actual study,the scholars are often not directly reflected,although quantification is too difficult to research,the use of equity-type variables can be studied the welfare impact on the conclusion.The vary shares in different companies,invisible benefits would also be different,we could not copy the foreign research results,because the different actual exists between our country and abroad.I hope this research can enrich the real earnings management conclusions and develop effective executive compensation scheme for shareholders,also help to providing the governance of earnings management.