Study On The Relationship Between Executive Incentive And Earnings Management With Chinese Listed Companies

Late 19th century, the separation of ownership and operation is emerging and growing, "entrust-agent" question then arises and received extensive attention. In order to realize the value of the enterprise and maximizing shareholder value, British implemented an executive incentive system based on accounting earnings. The purpose to establish executive incentive system is to reduce the impact caused by "entrust-agent". Promote the interests of managers and owners are consistent. However, the formation of China’s capital market has a poor foundation, the high-speed development to some extent makes up for this deficiency, but due to lack of regulatory, in order to maximize personal gain, executives may manipulate earnings.In theory analysis, introducing the theory of executive incentive, earnings management and dynamic endogenous, through the analysis of the related theory research put forward hypothesis.The empirical analysis, this paper use the Shanghai and Shenzhen listed companies in China nearly seven panel data, by building multiple regression model, using the least squares method to analysis the main factors affecting executive incentive and earnings management. In addtion, in order to research the relationship between executive incentive and earnings mangement, this study established GMM model, then from OLS,2SLS and GMM three kinds of perspective to consider exogenous, endogenous, dynamic endogenous relationship between executive and earning management. The results are displayed in the static OLS model and consider only the endogenous problem 2SLS model,earnings management have a significant negative effect on executives incentives, however, coefficient changes after considering dynamic endogenous, earnings management at this time has a positive effect on executive incentive;In addition, in the static OLS model and consider only the endogenous problem 2SLS model, executives incentives have a significant negative effect on earnings management, coefficient changes after considering dynamic endogenous, executive incentive at this time has a positive effect on earnings management; All above analysis shows that dynamic endogenous have a strong influence on the results.