Executive Compensation,Fair Value Measurement And Earnings Management

It is of great practical significance to design a scientific and effective executive compensation incentive mechanism to solve the agency problem and maximize the value of the enterprise.Therefore,executive compensation incentive has always been a research hotspot.Reasonable and effective remuneration incentive mechanism can make senior manager and shareholders have the same goals,so that senior manager can make the decision of maximizing the enterprise value and reduce the agency cost.On the contrary,the unreasonable remuneration incentive mechanism may reduce the enthusiasm of the senior manager and they may make decisions that harm the interests of the enterprise,which can reduce the value of the enterprise.And even executives may be in their own interests to use their own information advantages for earnings management to enhance their salary levels.January 1,2007 The"Accounting Standards for Business Enterprises" promulgated by the Ministry of Finance of our country introduced the fair value measurement attributes.Although the application of the fair value measurement attributes improves the accounting correlation,in many cases the measurement of fair value needs to be applied accounting staff’s professional judgment,the introduction of this measurement attribute will inevitably increase the space for executives to carry out earnings management.This article starts from the definition of concept,defines the executive compensation,fair value measurement and earnings management of the basic concepts involved in this article,summarizes the literature of previous scholars,analyze the accounting target theory,principal-agent theory,contract theory and incentive theory,put forward four hypotheses and then studied executive compensation,fair value measurement and the relationship between earnings management,established five models,and then all listed companies in 2012-2015 A shares of non-Financial companies data empirical test,reached the following three conclusions:the existence of enterprises using the loss of asset value for earnings management,it is not obvious to use the profits and losses on the changes in fair value to manipulate profits;the existence of senior manager in order to adjust the level of earnings using earnings management;executives can confirm the value of assets Losses for earnings management to adjust their own salary levels,it is less likely that executives will use the profits and losses on the changes in fair value to manipulate profits to adjust their pay.