Accounting Concept,Quality Of Information Disclosure And Pay-performance Sensitivity

Since the new Chinese "Enterprise Accounting Standards" was implemented on 1st January,2007,the specific accounting standards had been changed as well as the accounting concept.For example,we changed the confirmation of accounting income from Asset-Liability View to Revenue-Expense View.Besides,this change has a significant impact on the accounting information,which in turn affects the contractual relationship based on the accounting data.Considering the separation of the ownership and management of the modern company,the most prominent contractual relationship is the executive compensation contract.Through the study of the relationship among the accounting concepts,the quality of information disclosure and executive pay performance sensitivity,this paper helps to improve the executive pay assessment system and realize the diversification of executive pay performance evaluation.Based on the change of accounting standard and the asset liability view of the accounting recognition concept,this paper explored the executive compensation under different level of information disclosure quality.At present,the formulation of executive pay contracts in China is mainly based on the "pay-performance" assessment,including the disclosure of accounting performance,and this affect the effectiveness of executive compensation contracts.This paper aims to study the changes in the recognition of accounting earnings in the case of different quality of information disclosure,and the specific changes in executive compensation and accounting performance indicators.Based on the theory of principal-agent,the theory of information asymmetry and the theory of optimal contract,this paper analyzed the change of accounting concept,which makes a significant change among the net profit,net assets and the sensitivity of executive compensation.Apart from that,we did a further research on the difference of the change under different level of information disclosure quality.This article examines the data of listed companies on the Shenzhen Stock Exchange from 2003 to 2015.The study found that: Firstly,under the influence of the accounting concept from the Asset-Liability View to Revenue-Expense View,the sensitivity of net profit and executive compensation is significantly decreased,but the sensitivity of net assets and executive compensation increased significantly.Secondly,the quality of information disclosure will affect the level of executive compensation,the quality of information disclosure and executive pay performance sensitivity is positively correlated.Thirdly,the accounting concept changes,the higher the quality of information disclosure,will be significant improve the sensitivity of net assets and executive compensation,significantly reduce the sensitivity of net profit and executive compensation.This paper consists of three parts.The first part is the introduction,introducing the research background and significance,the research contents and methods;The second part is the main body,from the second chapter to the fifth chapter,based on the literature review,put forward the research hypothesis,the research design and the empirical results of analysis;The third part is the conclusion of this paper,puts forward relevant policy suggestions and summarizes the shortcomings and the future research prospects.