Equity Incentive And Accounting Information Manipulation

To some extent,although the rapid development of equity incentives can create incentive effect to motivate executives to work hard and ultimately promote the improvement of corporate performance;however,equity incentives have also brought negative effects in recent years,for example,equity incentives have prompted executives to inflate the company's share price through profit manipulation,financial restatements,and other accounting information manipulation behaviors to achieve self-interest.Therefore,a large number of scholars have begun to study the impact of equity incentives on the accounting information manipulation,trying to study the correlation between the two,but there is no consistent conclusion.On the basis of the existing literature and the perspective of executive risk taking,this paper studies the characteristics of equity incentives--stock return volatility sensitivity Vega's and stock price sensitivity Delta s influence on accounting information manip,ulation behavior including profit manipulation and financial restatements.On the one hand,studying the internal mechanism of the impact of the characteristics of equity incentives on accounting information manipulation is conducive to a better understanding of the impact of equity incentive plans on executive accounting information manipulation,and It is also possible to further understand the risk-taking effect and incentive effect of equity incentives,in line with the research trend of equity incentives;On the other hand,the study of its internal mechanism can provide some reference value for companies or related departments to formulate equity incentive plans.Using 246 listed companies which have implemented equity incentive from 2010-2015 in China as the sample,and using respectively the sensitivity of the executive equity portfolio to changes in stock return volatility to measure the risk-taking effect Vega,and the sensitivity of the executive equity portfolio to changes in stock price to measure the incentive effect Delta,by making statistical testing of panel data of relevant variables,this paper empirically examines two kinds of relationships,one is between Vega,Delta and real earnings management,the other is between Vega,Delta and financial restatements.The empirical research shows that the risk-taking effect of equity incentive Vega is significantly positively correlated with real earnings management,while the incentive effect Delta is negatively related to real earnings management and not significant.Similarly,there is a significant positive correlation between Vega and financial restatements,and there is no evidence that the incentive effect Delta has a correlation with financial restatements.Therefore,it is the risk-taking effect of equity incentive Vega instead of the incentive effect Delta,which increases the willingness of managers to take risk,which eventually leads to the occurrence of accounting information manipulation.And this paper further validates the impact of equity incentives on accounting information manipulation under the different nature of property rights.The research shows that under the background of state-owned enterprises,due to the special appeals of executives,the risk-taking effect of equity incentives Vega is not enough to lead to accounting information manipulation.However,under the sample of non-state-owned enterprises,Vega is still significantly positively related to accounting information manipulation,and the incentive effect of equity incentives Delta is still not significant in the two samples.