A Synergistic Study On Plan Design,Timing And Earnings Management Under Equity Incentive Plans Of Wonders Information

Since the Trial Implementation of Measures on Full Circulation Reform for Listed Companies in 2005,equity incentives have been sought after by many listed companies in China,which are considered as an effective way to resolve the inconsistency between principals and agents,thus becoming an important management for many companies to solve principal-agent problems.However,with more and more companies implementing equity incentives,the research on the effectiveness of equity incentives is also increasing.Many scholars have questioned the validity of equity incentives.Due to the self-interest motivation,the management will make the original intention of implementing equity incentives impossible,which is not good for the long-term development of the company.This paper takes Wonders Information as an example to analyze its three equity incentive plans implemented,focusing on the motivations,processes and results during plan design,timing and earnings management by the management.The following conclusions are drawn:(1)The target of the equity incentives is too simple,and is more prominent when the incentive object includes senior management.(2)Wonders Information may have earnings management during the evaluated years of equity incentives,such as insufficient provision for bad debts,insufficient provision for inventory depreciation,excessive capitalization of research and development expenses,and insufficient impairment of goodwill.(3)After the conditions are fulfilled,the management may have increased the share price of the secondary market by means of capital reserve conversion to increase capital gains.(4)The above behavior may be influenced by management's maximization of personal interests.On the basis of the above conclusions,this paper puts forward ideas for solving the above problems,including:(1)improving the corporate governance structure;(2)improving the quality of information disclosure;and(3)improving the equity incentive management system for private enterprises.The research methods and research perspectives of this paper have some innovations based on previous studies.It is hoped that the research results of this paper can be used for reference to relevant enterprise,external investors and regulatory agencies,and can drive the further improvement of China's equity incentive market.