| With the continuous acceleration of the marketization process in China,family-owned private enterprises have gradually adopted power separation corporate governance structures and performance-related compensation incentives to encourage executives to maximize their talents and improve corporate profits.However,compared with state-owned enterprises,the operating goals of private enterprises are more uniform and market-oriented,and private enterprise executives may be more motivated to perform speculative earnings management in order to maximize their own remuneration.In recent years,the frequent occurrence of “ sky-high-price compensation” for top executives has indirectly demonstrated that there may be some connections between executive compensation and earnings management.Therefore,research on the correlation between executive compensation and earnings management of private listed companies has certain theoretical and practical significance.In addition,in Chinese transitional economic environment,there is a close connection between the enterprise and the government.Without the inherent advantages of the state-owned enterprises,private enterprises are more urgently needed to obtain resources through political connections and seek government asylum.Hence private enterprises often establish contacts with government by hiring government officials or NPC deputies with political backgrounds.Some studies have found that executives with political connections generally receive higher salaries.However whether this kind of excessive compensation is the manifestation of executives ability or the consequences of earnings management remains to be further studied.Therefore,political correlation variables are introduced in this paper to further study the regulatory effects of political connections in the relationship between executive compensation and earnings management.Using the combination of normative and empirical research,this paper first systematically teases the related literature and finds the key ideas of this study.Secondly,based on the analysis of the basic theory,this paper puts forward the research hypothesis according to the current situation of private listed companies.And finally taking private enterprises listed on Shanghai and Shenzhen Stock Exchange from2010-2015 as the sample,the relationship between executive compensation,accrued earnings management and real earnings management is empirically examined.Furthermore,the hierarchical regression method is used to respectively investigate the regulatory effects of the government officials political connections and NPC deputiespolitical connections on the relationship between executive compensation and earnings management.The empirical results have shown that,executive compensation has remarkable negative influence on accrued earnings management,and remarkable positive influence on real earnings management.And government officials political connections will positively regulate the relationship between executive compensation,accrued earnings management and real earnings management.However the NPC deputies political connections have no significant regulatory effects.According to our current social background and company situation,based on the perspective of political connections,this paper analyzes the different influence of private listed companies executive compensation on earnings management under different political connections contexts.On the one hand,this paper enriches and expands the research results in the areas of political connections and corporate governance.On the other hand,it provides a theoretical basis for companies to design executive compensation tactics to curb earnings management in the context of political connections. |
