Researching On Equity Incentive Based On The Perspective Of Earnings Management

Equity incentive as a long-term compensation incentive system for corporate managers and employees in the business management came about in the 50 s of twentieth Century in the United Stated.In 2006,after the problem of equity division was properly solved,the listed companies in China began to implement the equity incentive plan.The purpose of carry out equity incentive is to make the operator's personal interests and business interests together,and to solve the principal-agent relationship problem of conflicting interests,to stimulate the operators by improving the enterprise long-term value to increase their wealth,which is a kind of institutional arrangement on residual claims in modern enterprises.It is undeniable that the equity incentive plan has played an important role in improving the long-term value of the enterprise and solving the principal-agent relationship.However,management's desire to obtain such incentives is often accompanied by certain governing conditions,such as term conditions and performance conditions.But,due to the macro environment of China's capital market and corporate governance is not mature,and the lack of effective supervision mechanism and assessment criteria,combined with the understanding of the implementation of equity incentive for executives of the long-term incentive mechanism is not clear,they tend to be in this way to get rich quick,pocketed the purpose.For this reason,they often use the false financial information and manipulate the current profits and other irregularities in the effective period to achieve the right conditions,in order to gain the improper interests.As a result,the equity incentive which is originally designed to solve the principal-agent relationship has become a channel and soil for managers to seize personal interests,damage shareholders' rights and interests,and endanger the long-term development of enterprises.By using the method of normative analysis and case analysis and other research methods,this paper deeply analyzes the implementation of equity incentive plan after the financial effect of M company,and the implementation of the plan and the degree of earnings management and the means to reveal the equity incentive may lead to earnings management of company executives.This article is divided into six parts: the first part is the introduction.This part mainly expounds the background,significance and research ideas of the research,clarifies the innovation point and the methods to be adopted.The second part is the theoretical basis and literature exposition.This paper mainly introduces the related theories and research status of listed companies' equity incentive,earnings management and the relationship between the two parties in the past and foreign literature.The third part is the case and the performance analysis of equity incentive.This part will show the specific equity incentive plan of the case company,and analyze the performance through the methods of financial index analysis and DuPont analysis.The fourth part is the analysis of earnings management.This part takes the upper part of the question and makes the hypothesis of "under the equity incentive plan,the earnings management motivation at the top of the company to improve the performance to achieve the assessment index",and confirms it through the analysis of the model and related financial indicators.The fifth part is the case summary.This paper analyzes the motivation,unfavorable results and solutions of the earnings management behavior under the incentive of equity incentive.The sixth part is a summary.The research results are summarized,and the shortage and Prospect of the research are put forward.Through the study,this paper draws the following conclusions:(1)the implementation of equity incentive has improved the performance of the company.(2)the performance improvement after the implementation of equity incentive plan is not always due to the positive role of equity incentive plan,but also to executives' earnings management behavior for personal interests,so as to achieve performance indicators.