The Research On The Relationship Between Equity Incentive And Earning Management In The Chinese Listed Companies

With the development of securities market,the creditors,stockholders,stock supervision departments and other stakeholders pay more and more attention to the earning management in listed companies.The article uses the enterprise contract theory,principal-agent theory and information economics to make the theoretical analysis and the demonstration studies. The goal is to deepen the understanding of earnings management theory,to provide some suggestions for the formulation of managers'reward contract and the design of managers'stimulation mechanism,and to restrain earnings management of our listed firms.the relationship of equity incentive and earning management is empirically analysed by using the data of listed from 2002 to 2005 in this paper;the result is that different equity incentive modes will have different influence on earning management;earning management condition is different in different industries;then we use panel data model to get the regression that there is insignificant positive correlation between incentive and earning management.The examination result of this article indicates that on the one hand,the listed companies lack effective incentive,the level of equalities incentive in China is not high enough,and performance stock predominates in the styles of incentive which lead to the lack of Enthusiasm of managers,on the contrary equalities incentive incur the earning management.on the other hand,the emolument based short-term achievement will make managers manipulate earning for their own interests.