Equity Incentive And Real Earnings Management

Equity incentive is an important part of enterprise management mechanism As a long-term incentive mechanism,Equity incentive can connect the managers and shareholders of the enterprise effectively,reduce the contradiction between principal and agent,and help the o enterprise development.However,due to the imperfect supervision system,based on the principle of information asymmetry,equity incentives may also induce managers to manipulate earnings to achieve vesting conditions for personal gain.At present,most scholars' research on earnings management takes accrual earnings management as the research object,and studies enterprises as a static whole.Compared with accrual earnings management,true earnings management is easier for business managers to use because of its flexibility and concealment.Enterprises are a dynamic development process.The operating conditions and challenges faced at different stages are different,so the methods and opportunities for real earnings management are also different.Taking the life cycle perspective as the starting point,studying the relationship between equity incentives and real earnings management in the enterprise is in line with the development process of the enterprise,which can better promote the role of equity incentives in company operations and governance,and provide equity incentive strategies for different stages of the enterprise.Provide constructive advice.This article first theoretically sorts out relevant references and theories at home and abroad,and discusses the relationship between the degree of equity incentives and real earnings management from the perspective of life cycle.With reference to relevant research at home and abroad,Roychowdhury's model is used to measure true earnings management.The amount of incentives granted by the equity incentive plan to the company's total equity(INCENTIVE)is the proxy for the degree of equity incentives.The validity period(LONG)in the equity incentive disclosure report indicates stocks.For the validity period of incentives,two main equity incentive models are selected: restricted stocks and stock options.Starting from the three dimensions of the degree of equity incentives,the validity period of equity incentives,and the model of equity incentives,other control variables related to the company's operating conditions are introduced to establish a regression model.Select the equity incentive status implemented by A-share listed companies in 2014-2018 as empirical data,and use the sample of the company for regression analysis.From the perspective of the life cycle of the enterprise,the impact of the degree of equity incentive on the true earnings management in the company is analyzed..Corresponding empirical test analysis found that: Real earnings management and the degree of equity incentives have a significant positive correlation;Compared with mature companies,the positive correlation between the degree of equity incentives and the true earnings management of growingup companies is more significant;the growth-oriented companies,implementing Option incentives more significantly induce real earnings management than restrictive stock incentives,while mature companies,restrictive stock incentives more significantly induce real earnings management than stock option incentives;for longterm companies,extending the validity period of equity incentives cannot significantly inhibit real earnings Management,while mature companies,extending the validity period of equity incentives will significantly inhibit true earnings management.further research,the enterprises were divided into national-owned groups and nonnational-owned groups according to the nature of equity,and regression analysis and comparison were conducted.Compared with non-national-owned enterprises,real earnings management has a more positive correlation with the degree of equity incentives of national-owned holding companies.The implementation of restrictive stock incentive models by national-owned holding companies will more significantly induce true earnings management.Really induce real earnings management more significantly;in both enterprises,extending the effective period of equity incentives can inhibit real earnings management behavior,and extending the effective period of equity incentives in national-owned enterprises will play a more significant role.Through empirical research on equity incentives and real earnings management,this article provides targeted recommendations for equity incentive plans of listed companies at different life cycle stages,which have great significance for protecting shareholders' rights and promoting the long-term development of enterprises.