Study On The Impact Of Listed Company Equity Incentive On Real Earnings Management

There are more and more A-share listed companies issuing equity incentive plan since the implementation of Management Methods of Listed Company’s Equity Incentive (trial implementation) in the listed companies at the beginning of 2006; meanwhile, with the promulgation of new Enterprise Accounting Standards of 2006, the elasticity of accounting management of listed companies has showed a tightening trend, and the cost of accrual earnings management way which is commonly adopted by listed companies has become higher, and is likely to be found by regulators. Therefore, a large number of listed companies adopt accrual earnings management while starting to use the real earning management so as to manipulate the earnings during the reporting period.This paper sorts out the researches of the predecessors on real earnings management as well as the relationship between equity incentive and real earnings management in the part of literature review. In the part of theoretical basis, it describes the equity incentive, the theoretical basis of earnings management, elements of equity incentive. After a review of the literature as well as reserving related theoretical knowledge, this paper proposes research hypotheses. Based on descriptive statistics, T-test, regression analysis, it proves the equity incentive companies really have more real earnings management behaviors in the first year of performance assessment. After proving that equity incentive would lead to more real earnings managements, it further studies on how the elements of equity incentive plan act on real earnings management, obtaining the following conclusions:equity incentive behavior will increase the real earnings management behavior of listed companies; equity incentive’s intensity is positively correlated with real earnings management; the degree of difficulty in realizing the performance assessment has a positive correlation with the degree of real earnings management; use restricted equity for motivation can restrain real earnings management to a certain extent. There is not any significant correlation between the valid period of equity incentive plan and real earnings management.