Study On Earnings Management Under Equity Incentive Of K Company

Enterprises,in light of the economic growth,have opted to introduce equity incentive plans to cut down on principal-agent expenses.The original intention of the equity incentive system is to encourage the company managers so that they can make more efforts for the future development and prospects of the company from the perspective of investors.However,in practice,managers will be affected by incentives such as salary or stock.When estimating that their own efforts will not be rewarded,managers will whitewash the operation results of enterprises by means of earnings management to achieve the exercise standard and obtain equity incentives.Such behavior not only hinders the development of enterprises,but also damages the rights and interests of internal and external stakeholders of enterprises.Therefore,in the design and implementation of incentive schemes,it is necessary to enhance the ability to identify earnings management,identify the way and impact of earnings management,and avoid manipulating profits,which are both necessary in theory and application.This paper takes Optical Library Technology Ltd.as the research object.Based on the use of the revised Jones model to measure the level of accrual earnings management a nd the use of the new real earnings management model proposed by Li Zengfu in 2011 to measure the level of real earnings management,it is determined that Optical Libr ary Technology has earnings management.Furthermore,through the analysis of the fi nancial indicators such as the operating income,administrative expenses and receivab les of the company from 2017 to 2021,it is concluded that during the implementation of the stock option incentive plan,the management carried out earnings management by relaxing the credit policy,increasing the credit sales,and setting up the discretionar y expenses,thus affecting the company profits.Secondly,the earnings management re lated elements and the implementation of the equity incentive plan are reviewed in det ail.Thirdly,it analyzes the negative effects that earnings management behavior may b ring to the company,such as the unrealized direct purpose of equity incentive and the unsustainability of earnings results.Finally,according to the above research,it is belie ved that the equity incentive may cause the management and earnings management tendency,and from the two perspectives of listed companies and investors,the autho r gives some suggestions on the design of equity incentive scheme and the identificati on of earnings management,so that the equity incentive plan can better achieve the po sitive effect.This article explores the relationship between equity incentives and earnings management,enriches relevant research on equity incentives and earnings management,analyzes K Company’s adoption of earnings management methods and their adverse consequences,which is beneficial for external investors to have a clearer understanding of the operating conditions of listed companies,identify earnings management behaviors,and promote enterprises to provide more authentic and reliable financial information reports,promoting the healthy development of the market.