| The shortsightedness of the managers of state-owned enterprises has always been the key problem that the reform of state-owned enterprises attempts to solve.For example,in order to maintain and increase the value of state-owned assets,the SASAC of the State Council issued the Interim Measures for the assessment of the business performance of the heads of central enterprises in 2003,aiming to curb the short-sighted behavior of the managers of state-owned enterprises by establishing an effective incentive and restraint mechanism.Business performance appraisal consists of annual business performance appraisal and term of office business performance appraisal.The design of annual appraisal combined with term of office appraisal is mainly to establish medium and long-term incentive and restraint mechanism by unifying short-term objectives and long-term development of state-owned enterprises.On the one hand,managers should pay attention to the long-term competitiveness of enterprises,curb the short-sighted behavior of managers of state-owned enterprises,and then increase the long-term benefits of enterprises.On the other hand,managers should focus on the current performance in the long-term development of enterprises.However,the phenomenon of short-term decision-making behavior of managers of state-owned enterprises has not been effectively suppressed in recent years.Why are managers of state-owned enterprises frequently exposed to the short-sightedness of decision-making behavior under the medium and long-term incentive and constraint mechanism set by stage assessment?Some literatures focus on the relationship between the continuously adjusted performance appraisal indicators and managers' short-sighted behavior decision-making from two aspects:the incentive and constraint mechanism of appraisal and the budget appraisal system.These studies found that:the assessment of business performance is easy to induce short-term decision-making and earnings management and other short-sighted behaviors.On the one hand,the state-owned enterprises have higher performance sensitivity,which is required by the explicit indicators of performance evaluation.The incentive mechanism of accounting based on Accounting indicators is easy to cause the person in charge of the enterprise to take short-sighted actions to improve the current financial performance.On the other hand,under the budget assessment system,the assessment performance in the assessment period is determined by the director of the state-owned enterprise after independent declaration,which to some extent induces the director of the enterprise to manipulate the earnings to smooth the enterprise performance.The above research provides a lot of empirical evidence for the relationship between the management performance appraisal system and the short-sighted behavior decision-making of state-owned enterprise managers,but these evidences are still based on the overall event study of the management performance appraisal by adjusting the appraisal indicators and incentive and restraint mechanisms,and there is no analysis of the operation from the perspective of the appraisal period set respectively by the business performance appraisal and the annual management performance appraisal Economic consequences of performance appraisal.According to the assessment content of business performance assessment,the factors that affect managers' decision-making are not only the incentive and constraint mechanism based on assessment indicators,but also the assessment and evaluation period.The business performance appraisal uses annual appraisal combined with tenure appraisal,and the appraisal period is set to three years by "one size fits all".Under the medium and long-term incentive and restraint mechanism established in the performance appraisal,the setting of the appraisal period makes the decision-making period of the managers of state-owned enterprises extend from the annual appraisal to the tenure appraisal,and the managers are more willing to choose the long-term projects to maximize the enterprise value.However,the long-term investment project can not generate cash flow at the beginning of the assessment period,which results in that the person in charge of the state-owned enterprise can not transfer his ability to SASAC.Therefore,when the assessment period is set to three years,in order to avoid being labeled as "poor ability",establish reputation as soon as possible,and to achieve the assessment requirements of short-term performance objectives(annual financial performance)and long-term performance objectives(three-year average of annual financial performance in the assessment period),managers have strong motivation to take measures to improve the financial performance of the current enterprise at the beginning of the assessment period Short sighted behavior decision-making.Accounting earnings reflect the operation and financial performance of an enterprise,which is the main object of short-sighted managers to manipulate financial performance.Based on this,this paper takes earnings management as the research object,and empirically tests the impact of exogenous decision-making period on earnings management of state-owned enterprises.Because the managers of state-owned enterprises generally experience several tenure evaluations during their tenure,if the monotonous changes of managers' decision-making vision and earnings management in each stage of evaluation period are summarized,it actually reflects a weekly feature of managers' tenure and earnings management.In order to identify this periodic feature,this paper also controls the fixed effect of "company tenure assessment".Using manual collection of performance evaluation data of state-owned enterprises affiliated to SASAC from 2004 to 2017,focusing on the decision-making period of managers,this paper tests the impact of exogenous evaluation period on earnings management of state-owned enterprises.The results show that the managers of state-owned enterprises will carry out positive earnings management at the beginning of the tenure evaluation period,and the degree of earnings management of state-owned enterprises will gradually decrease with the approach of tenure evaluation.The results of economic mechanism analysis show that under the medium and long-term incentive and constraint mechanism set in the term of office performance appraisal,the long-term investment project performance return period is long,and it can't generate income immediately at the beginning of the appraisal period,which results in that the person in charge of the state-owned enterprise can't transfer his ability to the SASAC.In order to avoid being labeled as"poor ability" and establish reputation as soon as possible,managers have the motivation to carry out positive earnings management at the beginning of the assessment period.Further analysis shows that the relationship is more significant in the competitive industries,the local SASAC,the state-owned enterprises,and the samples of state-owned enterprises that signed the tenure assessment for the first time.The conclusion of this paper shows that the annual performance appraisal based on short-term performance is easy to induce managers' short-term earnings management,which is not conducive to accurately identify the ability of state-owned enterprise directors under the incentive and constraint mechanism of the performance appraisal system.The conclusion of this paper has the following enlightenment:first,the business performance appraisal adopts the method of annual appraisal combined with tenure appraisal.Under this medium and long-term incentive and constraint mechanism,in order to achieve the annual business performance appraisal performance target when the tenure performance appraisal target is completed,managers have the motivation to take earnings management to improve the financial performance at the beginning of the appraisal period.In this paper,we find that the state-owned enterprise managers usually conduct positive earnings management at the beginning of the assessment period,and the degree of earnings management gradually decreases as the assessment approaches.This result shows that the annual performance appraisal based on short-term performance is easy to induce managers'earnings management in a short period of time,which is not conducive to accurately identifying the ability of state-owned enterprise directors under the incentive and constraint mechanism of the performance appraisal system.It is particularly important for SASAC policy makers to consider whether they need to adjust the assessment period.Secondly,because the assessment period "one size fits all" is set to three years,it is impossible to accurately judge the impact of assessment period on managers' decision-making,and the empirical results can only identify the change of earnings management degree of state-owned enterprise principals during the assessment period.Therefore,this paper can not answer whether the length of assessment period set in the term of assessment is the best. |
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