Equity Incentive Grant,Audit Quality And Earnings Management

The separation of ownership and management rights promotes the development of modern companies,but leads to information asymmetry and principal-agent problems between managers and shareholders.Equity incentive is one of the most important incentive and restraint systems to solve information asymmetry and principal-agent problem.By adopting the equity incentive plan,the company can reduce the moral hazard of managers and reduce the principal-agent cost caused by the conflict of interests between shareholders and managers.However,the introduction of equity incentive mechanism has also given rise to new problems.The fomer managers of listed companies will reduce the performance and exercise difficulty in the base period through earnings management and depress the exercise price.However,the financial statement surplus is determined by both the auditor and the manager.Therefore,the ministry of finance and the Chinese institute of certified public accountants remind the auditor to pay attention to the possibility of the manager manipulating financial information when the equity incentive of the listed company.When it does not match the requirements of the ministry of finance,although some studies have focused on the correlation between equity incentive award and earnings management conducted by managers,and have done a lot of empirical research on motivation,less attention has been paid to the impact of audit quality in this process.The practice case shows that before the equity incentive is granted,the managers will carry out downward earnings management,and the choice of the way to implement earnings management will be different depending on the audit quality.Then the effectiveness of equity incentive mechanism is affected.Therefore,under different audit quality,it is necessary to study the heterogeneity of earnings management implemented by managers before equity incentive is granted in practice.This paper selected the 2012-2017,the Shanghai and Shenzhen A shares of the listed company data for original samples,with the principal-agent theory,theory of earnings management,audit quality theory as the foundation,the integrated use of descriptive and multivariate linear regression,robustness,starting from the specific corporate governance behavior of equity incentive,enpirical study:(1)equity incentive granted to have any impact on earnings management;(2)audit quality of earnings management will have what impact;(3)equity incentive grant stage,audit quality on the earnings management of the heterogeneity of the impact.Through empirical analysis,this paper mainly comes to the following conclusions:the awarding behavior of equity incentive has a negative impact on the earnings management of enterprise managers,managers will produce downward earnings manipulation behavior,often through the real activity earnings management model to achieve the goal of earnings;At the same time,audit quality also has a negative impact on the earnings management of enterprise managers.In the stage of equity incentive award,managers with high audit quality tend to implement real activity earnings management to reduce profits.Through this research,enriched the equity incentive grant,audit quality and earnings management related theories.According to the empirical conclusion,the paper puts forward relevant Suggestions for market participants.Regulators should actively improve the relevant system of equity incentive,external audit,as a service institution with high independence,should improve the quality of audit in many aspects,and take countermeasures for the earnings management of real activities as soon as possible.