Research On Executives' Characteristics,Choice Of Equity Incentive Modes And Earnings Management

The full play of the positive role of equity incentives is inseparable from the scientific choice of equity incentive models.At present,the listed companies mainly have two incentive models:stock options and restricted stocks.Although there have been a lot of studies on corporate characteristics such as corporate size,corporate growth and corporate governance,this is mainly based on the motivated objects are homogeneous.However,in reality,the motivated objects may not be homogeneous.As we all know,different equity incentive models have different characteristics and applicability,and the core of equity incentives lies in motivating senior executives to serve shareholder value.Therefore,when you choose equity incentive models that an appropriate equity incentive models based on the characteristics of executives,you can make the incentive effect be optimized?Based on this,the first research question is raised,will the senior executives characteristics influence the choice of equity incentive model?In recent years,domestic and foreign listed companies have frequently occurred financial disclosure scandals,earnings manipulation and other financial incidents.Some studies believe that equity incentives are one of the root causes of earnings management behavior.In order to reduce the occurrence of this behavior,companies should restart with the design of senior executives equity incentive programs,then the choice of equity incentive model is the key and primary factor.So,will different equity incentive models affect earnings management behavior?Based on this,the second research question is presented,will the equity incentive model have an impact on earnings management?The new corporate accounting standards give senior executives more discretion.As the core managers of listed companies,the cognition,emotions and values of senior executives play an important role in business decision-making,which may affect earnings management behavior.Existing literature mainly studies the impact of senior executives education,age and other factors on earnings management.These are the intrinsic characteristics of senior executives.Conversely,the external characteristics of senior executives,such as,social capital,dual-job integration,and executive shareholding,may also be have an important impact on earnings management.However,existing research rarely involves it.Based on this,the third research question is proposed,whether the characteristics of senior executives(internal and external)will affect earnings management?From the above analysis,it can be seen that the senior executives characteristics may affect the choice of equity incentive models.At the same time,the equity incentive model may also have an impact on earnings management.Therefore,it is further proposed that the equity incentive model may play an intermediary conduction effect in the relationship between senior executives characteristics and earnings management?In addition,although the equity incentive model will affect the earnings management of senior executives,equity incentives are only a part of executive compensation,and the motivation for executive earnings management usually depends on their total compensation.From the existing research literature,it is found that most of the existing research studies are based on a single component of executive compensation.They have not comprehensively considered all components of executive compensation to analyze the impact on earnings management.Then,senior executives monetary compensation is regarded as an important part of executive compensation.Will senior executives monetary compensation and equity incentives affect earnings management?Based on this,the fourth research question is further raised.Will senior executives monetary compensation play a moderating role in the relationship between the equity incentive model and earnings management?The main research work and innovations of this paper are as follows:(1)Based on the high-level theory,innovatively explored the impact on the choice of equity incentive model from the perspective of the internal and external characteristics of senior executives,and revealed that the influence path between senior executives characteristics and the choice of equity incentive model that has been effected through the intermediate key point of decision-making behavior.From research results about the influence of executive characteristics on the choice of equity incentive model,we can find that the companies should choose to restricted stock model when senior executives are high ages,long tenure,high degree,rich social capital,integration of two positions,and low shareholding ratio.On the contrary,the companies should choose to stock option model when senior executives are low ages,short tenure,low degree,lack of social capital,separation of two positions,and high shareholding ratio.At the same time,the feature of senior executives gender has no significant impact on it,which may be due to the limitation of sample selection.The research conclusion has important reference value for companies to choose the equity incentive mode.Specifically,when selecting a company's executive equity incentive mode,listed companies must take into account not only the characteristics of the company,but also the personal characteristics of the executives'incentive mode.(2)This article brings the senior executive characteristics,equity incentive model,and earnings management in a framework,and systematically and deeply analyzes the influence relationship and path between the three.This article divides earnings management into accrued earnings management and real earnings management,and explores the differences in the impact of different equity incentive modes on accrued earnings management and true earnings management.The results of the study found that,compared to the restricted stock incentive mode,the stock option incentive mode is more likely to trigger executive accrual earnings management and true earnings management behavior.Through further research analysis,it is found that the equity incentive model plays a partial intermediary effect in the influence of senior executives characteristics on earnings management,indicating that senior executives characteristics also have a direct influence on earnings management.Specifically,senior executives age,education background,tenure,social capital and shareholding have a significant negative impact on earnings management.Moreover,male senior executives are more likely to perform earnings management.The research has enriched and improved the research on the relationship between the characteristics of executives,equity incentive modes and earnings management.This article reveals the mechanism of its impact on earnings management from the perspective of micro-behavior,that is,the intrinsic and extrinsic characteristics of executives.It reveals that the influence of earnings management includes not only the company's characteristic factors,but the executive's characteristics also play an important role.This article broadens the existing earnings management research perspective.It supplements the relevant theories of executive characteristics,equity incentive modes,and earnings management It has practical significance in improving the earnings quality of listed companies,promoting the healthy and effective development of capital market,reducing the situation that the executive earnings management leads to the violation of relevant investment interests.(3)The paper scientifically reveals that senior executives earnings management behavior is the result of the comprehensive effects of their respective remuneration components.Senior executives motives for earnings management not only depend on equity incentives,but usually also combined with other remunerations to jointly determine the final earnings management.The study found that senior executives monetary compensation plays an "inverted U-shaped"moderating role in the influence of equity incentive models on earnings management.