| Modern business theory and practice of foreign countries have proved that equity incentives for improving corporate governance structure, reducing agency costs, improving management efficiency and enhancing corporate competitiveness has played a very positive role. However, with the development of stock market, earnings management of listed companies that implemented equity incentives also attract more and more attentions of creditors, shareholders, government stock supervision department and all the other earnings relevant groups. So we analyze the earnings management from the angle of managers'equity incentives.This paper is based on principal-agent theory, contract theory and other theories, analyzes the China's equity incentives and earnings management from theoretical and empirical angle. First recalls the relevant research literature at home and abroad, sums up the theoretical foundation of equity incentives and earnings management, describes the motives and methods of earnings management, and then analyzes the phenomena of equity incentives in listed companies. We find that the managers of listed companies in the implementation of equity incentives system have the motives of earnings management. Based on these studies, this paper selects one hundred and seven listed companies which have proclaimed they will implement equity incentives from 2006 to 2009 as a study sample. Then we choose the variables of equity incentives and earnings management to construct the model, and dose a demonstration research of the listed companies between equity incentives and earnings management by using the statistical software.The result showing that:management of listed companies in the implementation of equity incentives system, exist in the pursuit of high rewards for the motivated earnings management behavior and the degree of the earnings management is related to the degree of equity-based incentives, and the higher management stock proportion, the higher earnings management of listed companies. Also the analysis reveals that: earnings management has a positive correlation with the asset scales and net assets return, but doesn't have a significant relationship with debt ratio.According to the above analysis, and combine the current situation in our country, we propose some policies and suggestions of improving the earnings management in listed companies which carry out equity incentive, such as improving the management incentive system, strengthening the operation and supervision of securities markets and improving corporate governance structure. |
