Research On Earnings Management In The Fair Value Estimation Of Stock Options

Today,the equity incentive system seems to play a role in alleviating the principal-agent contradiction "savior." However,it also binds the interests of the operators and the interests of the owners.It is also a useful tool for the company executives to gain their own economic benefits through the internal management platform.As the equity incentive system is continuously adopted by listed companies,the drawbacks are constantly emerging,the incentives are irrational,the incentive effect is insufficient,and the executive management process is easy to induce executive earnings management,opportunistic behavior,etc.,which are all we need to solve further problemThis paper takes the earnings management problem in the fair value estimation of stock options as the research object,and takes the equity incentive plan announced by Yili in late 2006 as the target case.Firstly,based on the existing related research at home and abroad,the theoretical basis related to equity incentive earnings management is expounded.Secondly,a brief review of the development process of Yili's shares over the past few years was carried out.The draft of the equity incentive plan announced in 2006 was analyzed in detail from the two aspects of implementation motivation and performance requirements,thus explaining the paper.Focus on the reasons for stock option incentive fees.Starting from the equity incentive fee,the core of the whole paper is to discuss the earnings management problem that may exist in the fair value valuation process of the option directly related to the incentive feeThe article analyzes the earnings management methods in the process of estimating the fair value of Yili's options from the three levels of lowering the exercise price,the risk-free interest rate and the lower historical volatility.The method of visual data comparison is used to prove the influence of the selection of parameter values in the option pricing ruodel on the fair value estimation under different dates and conditions.And through the self-interest of the manager,the need to fulfill the debt contract,the need to complete the expected earnings performance,the need of equity financing and the need to reduce the political cost,the management of Yili shares is carried out in the process of fair value valuation of the entire option.Motivation for earnings management activities.After that,this paper selects key financial data to analyze the financial status and profitability of Yili's management after earnings management,and compares the results of earnings data to the impact of earnings management on the company's financial status.After analysis,Yili shares in the process of using the BS model to estimate the fair value of stock options,management can indeed "select,different parameter values within the scope of the standard,according to their own will,affecting the fair value of the option,thereby achieving The purpose of earnings management.Finally,this paper attempts to develop a reasonable equity incentive plan,improve the company's internal governance structure,establish a company,s internal management credit evaluation system,and refine the company's annual report disclosure in the equity incentives.It is suggested that it is expected to provide some reference for the formulation of incentive drafts and internal management systems for listed companies that have been adopted in China or are preparing to adopt equity incentive plansThis article is mainly composed of five parts.The first part is the research background,purpose and significance of the article.The research results of domestic and foreign scholars are sorted according to their respective research viewpoints,and the research methods and main research contents of the text are presented.The second part is related concept definition and basic theory,which is mainly related to stock options,fair value and earnings management.The third part is the analysis of the case of Yili,including the company profile,the analysis of the incentive draft and the analysis of the specific practices in the fair value estimation process.The fourth part is the analysis of the motive and effect of earnings nanagement under the stock option incentive mechanism of Yili.The fifth part is based on the above research,mainly from the internal governance of the company to nake recommendations for China's listed companies,hoping to have some reference.