The Fair Value Measurement And Management Equity Incentive

China formally implemented the new Accounting Standards on January 1, 2007.It marked that changes in fair value gains and losses as a start of the income statement affect the assets and profits of listed companies. The Ministry of Finance separately put forward the fair value measurement criterion on January 26, 2014, which means that the impact of fair value is growing, the impact on profit is also growing.The problem of principal-agent problem is the root of corporate governance, which is the problem that shareholders have to deal with.compensation contract mechanism is a good way to alleviate the principal-agent problem. The performance of the company is an important basis for the management compensation contract of listed companies. Therefore,changes in fair value gains and losses have an important influence on the design of management compensation contract.However, the fair value gains and losses on the management compensation has a "rewards and punishments" phenomenon, the fair value gains as a contribution to the efforts of management, but the loss of fair value change is not as a management error, and the change in fair value contribution to management's compensation exceeds that of other surpluses, which provides incentives for management to pursue his own interests in a way that undermines corporate value. This paper reviews literatures about fair value, management related literature and the fair value measurement and management correlation literature. Putting forward the hypothesis according to the existing shortcomings and the contract theory,take other profit and changes in fair value as independent variables, cash compensation and total compensation as dependent variables, and eight control variables. Finally, through the regression analysis to determine the"rewards light penalty" problem of the status quo and solutions. The results show that the shareholder has realized the special value of the fair value and reduced the contribution of the fair value change to the cash compensation, but the asymmetry of the fair value still exist, the reason may be the restrictions of the salary structure, to take equity and cash dual incentive mechanism can solve this asymmetry, to avoid the management of "negative profit loss." This also provides the reference suggestion for the stockholder to setting the salary contract.The innovation of this paper is to find a solution to the problem of"light reward and punishment" between the gain and loss of the fair value and the salary of the management, and to explain the validity of the double incentive from the perspective of demonstration.