Executive Tenure?Equity Incentive And Earnings Management Of R&D Expenditure

Under the separation of the two powers,executives have the actual control of the enterprise in the production and operation process of the enterprise,and are the decision-makers of the company's major activities.Executive tenure is one of the personal characteristics of executives,and plays an important role in the development direction and business decision-making of enterprises.In the different periods of executive tenure,for the sake of personal career concerns and reputation,the executives' management thinking and motivation are different.The business strategy and business activities are not the same.Therefore,Executive tenure has an important influence on the business performance and earnings quality in different periods of the enterprise.With the continuous improvement of accounting system,and reduction of accrued earnings management space,more companies tend to real earnings management.At the same time,our country strongly supports R&D activities,and the activities have the characteristics of long payback period,strong flexibility and high risk,which enhances the possibility of managing earnings.Therefore,this paper analyzed the relationship between executive tenure and earnings management of R&D expenditure in the different periods of executive tenure.In addition,in order to restrain the behavior of earnings management,It's not effective to develop norms to reduce earnings management behavior.lt is important to consider how to motivate executives to restrain the motivation of earnings management from the source.The equity incentive theory realizes the convergence of interests of owners and executives under the separation of the two powers.Therefore,when studying the relationship between two variables,this paper added equity incentives as a regulatory variable to explore the impact of equity incentives on the relationship between executive tenure and earnings management of R&D expenditure.On the basis of reviewing the existing research,based on the theory of high-level echelon,the five-stage model of tenure,career concern theory,reputation mechanism theory and incentive theory to analyze and exam how executive tenure and equity incentive affect earnings management of R&D expenditure.The paper selected A shares listed companies which first listed in Shanghai and Shenzhen during 2007 to 2017 as a sample and regarded it as research objective,and finally there were 12809 sample observations.The hypothesis were tested by constructing multivariate regression models.In order to make the conclusion of the last period of tenure more accurate,this paper controlled earnings management during the early years of tenure.The study found that compared with other years in the periods of tenure,executives tend to overestimate earnings by reducing R&D expenditures in the early years of their tenure,that is,there is a significant negative correlation between the early years of their tenure and earnings management of R&D expenditure;controlling the impact of the early years,compared to other years of their tenure,executives tend to overestimate earnings by reducing R&D expenditures in the last period.Equity incentive played a regulatory role in the relationship between the two variables,mitigating the negative correlation between the early years and last period of executive tenure and the earnings management of R&D expenditure.The study considered the motivation of earnings management in other periods of executive tenure,and compared the impact of the early years of executive tenure and other periods on earnings management of R&D expenditure,and last period of executive tenure and other periods on earnings management of R&D expenditure;further,this paper analyzed the impact of equity incentive on earnings management of R&D expenditure,and explored the impact of equity incentive on the relationship between executive tenure and earnings management of R&D expenditure.The research broadened the research scope of high-level management theory and incentive theory,and enriched the research content of executive tenure and earnings management.At.the same time,based on the conclusions of the research,some suggestions and countermeasures were put forward,which are helpful to make appropriate equity incentive scheme,to improve the executive appointment policies and incentive policies,to restrain earnings management behavior,and to improve' innovative capabilities.