Stock Incentive,Earnings Management And Effect Of Media Governance

The original intention of the stock incentive is to solve the principal-agent problem.Since the formal promulgation of Chinese “Listed Companies Stock Incentive Measures” in 2006,more and more listed companies have lunched their stock incentive plans.Although,a large number of studies have shown that stock incentive has stimulated the earnings management,which provide evidence for managers to improve their own compensation through earnings management method.To reduce the level of earnings management relies on the corporate governance mechanisms.As a kind of external corporate governance,can media monitoring play a governance role in curbing the earnings management or not,which has aroused the attention of academy.Based on the principal-agent theory,this paper studies whether stock incentive increase manager's earnings management behavior and further explores the moderating effect of media governance.The existing research focuses on the board of directors' features,internal control,auditing et al.,and there is less paper paying attention to media monitoring as an external corporate governance mechanism.This paper will explore whether media monitoring could have a governance effect on inhibiting earnings management triggered by stock incentives.This paper takes the sample of A-shares listed companies with stock incentive from 2010 to 2017.Using descriptive statistics and multiple linear regression methods,the following results obtained: stock incentives significantly improve the level of earnings management,and the more shares granted,the more the earnings management level is higher.The listed companies' earnings management goal is to meet the targeted performance indicators,and there is significant level of earnings management at the threshold where the reported performance just meets the targeted indicators.The number of incentive members and the level of earnings management have a significant positive relationship.Lastly,examining the moderating effect of media monitoring.The intensity of stock incentive and earnings management have a positive relationship,but after inducting media monitoring,the coefficient of the intersection item is insignificant.This result indicates that China's media monitoring doesn't have a governance effect of reduce the earnings management triggered by stock incentive.This paper provides useful enlightenment for practice: the supervisory entity should regard the company whose stock incentive performance index is just meet the targeted performance indicators as the regulatory focus.The setting of stock incentive performance indicators should be diversified,avoid relying on a single net profit index to measure;China's mass media should enhance the credibility and influence of press,to promote an effective media governance environment.