Game Analysis Of Equity Incentive On Earnings Management Based On Supervision

Equity incentive is generally considered as a good way to tackle the principal-agent relationship and reduce the cost of agency.For it makes the employees and enterprises to be the community of interest.Most researchers have demonstrate that equity incentive is more focusing on the long-term development of enterprises,alleviating short-sighted behavior,retaining talent,attracting talent,improving staffs innovation ability and enthusiasm,improving enterprise performance and promoting enterprise better development.Meanwhile,the implementation of equity incentive induced earnings management.However.earnings management deviate from the principle of financial neutrality,which resulting in external financial reporting offset.It emphasis the private interests which seeking personal interests for the purpose.As result,the public interest is damaged.Our result shows that,accrued earnings management is significantly negatively correlated with regulatory intensity,but it positively correlate with equity incentive intensity.There are no direct evidences to prove it correlating with level of assets and liabilities and asset size.And the accrual surplus of state-owned enterprises is not strong for non-state enterprises.