A Study On Earnings Management Of Listed Companies From Perspective Of Stock Option Incentive

By the end of 2006 , SASAC and the Ministry of Finance jointly issued The proposed methods during implementing Stock Option incentives in state-controlled listed companies(the territory). Since then, stock incentive system in our country started large-scale implementation. Modern business theory and practice of foreign countries has shown that stock incentives for improving corporate governance structure, reducing agency costs, improving management efficiency and enhancing corporate competitiveness and cohesion has played a very active role. However, earnings management of listed companies that implemented stock option incentives also attract more and more attentions of creditors, shareholders, securities regulators and other stakeholders. This thesis does a systematic summaries and combing on theories of earnings management first ,and then analyzes the phenomena of management compensation ,stock option incentive and earnings management in our listed companies .Based on these studies ,this thesis does an empirical research on the relationship between management compensation of listed companies that implemented stock option incentives and earnings management at last.This thesis uses the non-financial listed companies data from 2005 to 2007 as the research sample, deleting ST,*ST, new listed and missing companies. Methodically, after comparing and evaluating the methods of measuring earnings management in abroad, this thesis chooses modified Jones Model to calculate the Discretionary Accruals which is used to represent the earnings management. Then this thesis examines systematically the relationship between management compensation, stock option incentive and earnings management using Independent -Samples T Test, Person Correlate Analysis, and Linear Regression Analysis.The analysis reveals that there is no significant relationship between earnings management and management compensation; managers don't have a notable motivation on self-benefit basis to reinforce earnings management for increase their compensation level. In the last part, this thesis concludes the result, advances some counter measures and some advices.