Equity Incentives, Agency Costs And Earnings Management

Since the 1930 s,American economist burleigh and rice,with "principal-agent theory",the principal-agent problem has always been one of the hot issues of corporate governance.How to effectively solve the problem of asymmetry of interest and information asymmetry between the owners and managers of listed companies is the hot spot for scholars at home and abroad.Our country capital market relative to the United States and other developed countries in terms of the capital market is not perfect,how to effectively solve the interest between the principal and agent is not symmetric and asymmetric information are also important topic in front of Chinese listed companies.To deal with a series of questions of principal-agent,the listed company equity incentive policies or measures in succession,but whether these policies or measures will lead to the earnings management behavior of listed companies? Do management executives use proxy costs to manipulate corporate surpluses? It all needs to be tested by researchers in the field of theory and practice.The means of surplus management are varied,and will the cost of agency be one of them? Agency costs included in the scope is quite widespread,generally speaking,equity incentive can increase the enterprise overall agency costs,and fees during this class is not always rise to agency cost.In the case of equity incentive,if the business management has to sell a stake in the short term motivation,equity incentive will led to a decline in expenses during the agency cost,the purpose is to show off to other investors of the company's operation and management efficiency,or the use of agency cost control earnings management.In addition,as a carrier incentive stock,due to the characteristics of the effectiveness in security market in China,adopted by the equity incentive stock option exercise price of stock market fluctuations.For this reason,the paper intends to study the relationship between the equity incentive,the agent cost and the surplus management of the listed company.The research consists of five parts.Firstly,the paper expounds the research background,meaning and relevant concepts,and defines the main problems of the research.Second,reviews the equity incentive,agency costs and earnings management literature,the related literatures are reviewed,the author found that Chinese scholars research mostly focused on equity incentives and earnings management,investment efficiency,equity concentration,etc.,but according to our country's securities market related indicators research equity incentive,surplus management,the study of the agency cost is not much,and most scholars research on measure of agency costs mainly USES the overall concept of agency costs,this article from the cost during class agent cost equity incentive,agency cost,the relationship between the earnings management;Thirdly,the relationship between equity incentive,agency cost and surplus management is expounded theoretically,and the existing problems are identified and the research hypotheses are put forward.Third,using the empirical model,for securities market related index as the control variables,earnings management behavior of the listed companies,equity incentive and agent cost and agent cost and the relationship between earnings management;the inspection Finally,on the basis of the empirical examination,the paper puts forward relevant policy Suggestions and further research directions.The results of this article:(1)the management of the listed company under the incentive of ownership is the act of surplus management for the acquisition of equity or option;(2)the relationship between equity incentives and agency costs is negative and significant.In the context of our current system,equity incentive will drive management to reduce agency cost.(3)the relationship between equity incentives and earnings management present positive correlation,and significantly,showed that the higher the degree of equity incentive,the motives of listed companies earnings management is strong,the degree of higher and higher,which indicates that the implementation of equity incentive has contributed to the management of listed companies earnings management behavior;(4)in the case of equity incentive,agency cost is negatively related to the earnings management relations,and significant,which shows that the enterprise is the behavior of earnings management by reducing the agency cost,reduce the expenses of agency cost management one of the means of earnings management,but use was conducted in the agent cost,there is little proportion of the listed company earnings management.Operation and management of listed companies through the agency cost has multiplicity,the purpose of regulating surplus which on the one hand,by earnings management to achieve performance targets for equity or options,on the other hand,by reducing the agent cost to investors show its management ability,and to obtain more favorable conditions,stock trading to create favorable conditions for the sale.