Executive Incentive,Earnings Management And Audit Pricing

The separation of powers in modern companies has triggered a series of principal-agent problems.Executive incentives are an important way to solve agency problems.Through incentives,managers are motivated to work harder,align them with the company's strategic objectives,and promote the company's stable development.However,executive incentives may lead to self-interested behaviors of executives,thereby adversely affecting corporate governance and performance.As an independent economic supervision mechanism,audit firms can control and reflect audit risks by adjusting audit fees.At present,China is in a critical period of economic transformation and kinetic energy conversion.Implementing an innovation-driven development strategy,cultivating high-tech enterprises,and promoting the formation and improvement of the small and medium-sized(SME)board market are conducive to promoting the development of China's capital market and sustainable economic growth.Based on this,this article selects China's SME listed companies from 2013 to 2018 as the research object.First,it empirically studies the impact of earnings management on audit fees,and then further breaks down the executive incentives into monetary compensation incentives and equity incentives.The second type of incentives plays a regulatory role between earnings management and audit fees.This article enriches the research on audit pricing factor theory and executive incentives.It also has important practical significance for strengthening external regulatory mechanisms and improving corporate executive incentives.The results of this study show that the degree of earnings management is significantly and positively related to audit fees;the implementation of executive equity incentive plans will weaken the correlation between earnings management and audit fees;the higher the degree of monetary compensation incentives and equity incentives for executives,the stronger the binding relationship between earnings management and audit fees,and the more restrictive role of equity incentives.This paper draws conclusions based on empirical results,and analyzes from both the internal and external environment of the company,and proposes policy recommendations:improve the company's executive incentive system,optimize the company's internal control environment,strengthen the effectiveness of external audits,and improve the market economy system.Finally,in view of the shortcomings in the research process,a follow-up research prospect is proposed.