| In today’s society,the phenomenon of separation of powers between companies is widespread,and agency problems have always troubled companies.Supervision and incentives are two important channels for effectively alleviating agency problems,and an important part of the incentive mechanism is salary incentives.Since compensation incentives are related to equity and company efficiency,the issue of income distribution in various industries and the issue of executive compensation have always been the focus of attention from all walks of life.At present,the executive compensation of listed companies in my country is generally linked to performance.Although this plays a role in promoting the convergence of the interests of executives and shareholders to a certain extent,the phenomenon that executives use earnings management to improve company performance to increase their own salaries also continues to occur.At present,studies have shown that the gap between the compensation of executives and externally comparable executives can lead to unfair perceptions of executives.In order to alleviate this kind of fairness and tension,executives conduct earnings management.The CFO,one of the executives,is the main gatekeeper of accounting information and has an important and independent impact on earnings management.Moreover,according to the statistics of relevant data,the CFO’s salary level and external salary gap have been increasing year by year.So,does this pay gap make CFOs with more expertise more motivated to manage earnings? Furthermore,does the CFO play a significant role in promoting the relationship between the external compensation gap of senior executives and earnings management? Based on this,this article first starts with theoretical analysis,sorts out and discusses the relevant literature and theoretical basis of the external compensation gap and earnings management of executives,and determines the research direction;second,based on China’s 2008-2018 all A-share non-financial listed companies as A sample to conduct an empirical test of the relationship between the CFO’s external compensation gap and earnings management.Finally,it proposes measures to reduce the CFO pay gap to reduce CFO earnings management behavior and promote the company’s healthy growth.This paper finds through empirical testing:(1)The greater the CFO’s external compensation gap,the more likely it is to perform earnings management.(2)Thegreater the CEO’s external salary gap,the stronger the positive correlation between the CFO’s external salary gap and earnings management.(3)When the audit quality level and internal control level are low,the CEO’s external compensation gap will have a stronger positive adjustment effect on the relationship between the CFO’s external compensation gap and earnings management;while the audit quality level and internal control level will be higher.At that time,the CEO’s external salary gap did not have a significant role in regulating the relationship between the CFO’s external salary gap and earnings management.Based on the research results of this paper,this paper believes that the CFO,as the main supplier and gatekeeper of financial information,will have an important and independent impact on earnings management based on the external compensation gap.The company should improve the system related to CFO compensation,pay attention to the governance role of CFO in the company,increase the punishment of CFO,so as to reduce the CFO’s earnings management behavior based on the external compensation gap and improve the company’s earnings quality;second,the company should Strengthen internal and external supervision,that is,by improving the company’s internal control quality and hiring high-quality auditors,to strengthen the supervision of CFO and CEO,so as to effectively curb the CFO and CEO collusion to conduct earnings management. |
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