Empirical Research On The Influence Of Management Compensation Contracts On Earnings Management Of Listed Companies In China

In recent years, with the advancement and accomplishment of the equity division reform in Chinese listed companies, the capital market has changed a lot. Inspired by the equity division reform, the Management compensation mechanism has introduced equity incentive on the basis of the annual salary system. At the same time, the motive and behavior patterns of surplus management of listed companies have also become more complicated. The earnings management of the executives in listed companies will directly affect the accuracy of information that the listed companies have sent to the public, thereby affecting the investors’ investment decisions in the capital market. Therefore, it is of great significance to ensure the capital market will develop healthily whether the management compensation contract with equity incentive will affect or constraint the behavior patterns of earnings management of the executives in listed companies which tend to be more and more complex. On the basis of making summaries of the researches which are about management compensation contracts and earnings management both at home and abroad, to complete the management incentive system of Chinese listed companies, promote the capital markets of China develop healthily, this paper used these research methods as a source of reference and did the empirical study on how the management compensation contracts impacted on earnings managements.On the basis of reviewing the past research results at home and abroad, this paper primarily used the analytical method to do the research, accompanied with the theoretical research. There was a combination of normative analysis and qualitative analysis in the theoretical study. And in terms of empirical research, there exits multiple regression models which used to finish quantitative analysis.First of all, it established the research value of this article though the introduction of the research background, purpose and significance; meanwhile, after carding and summing up summaries of domestic and foreign advanced experiences, it defined and explains the concepts and theories related with the theory of the management compensation contracts and earnings management to determine the research scope. Secondly, on the basis of description and analysis of management compensation contracts and earnings management of executives in listed companies in China, this article used SPSS software, chose the listed companies from2008-2010Shenzhen-Shanghai market as samples to build model, and did the empirical study on how the management compensation contracts impacted on earnings management. Finally, combined with the results of the analysis and empirical study, this paper proposed appropriate countermeasures on how to perfect the management compensation contracts mechanism of listed companies in China.