Research On The Earnings Management Behavior Of Listed Companies Under The Motivation Of Compensation Contrac

According to the "rational man" hypothesis,people in business aim to maximize self-interest,so managers have an incentive to manipulate earnings to increase their own income.At the same time,if the internal and external supervision mechanism is not perfect,it creates a good environment for managers to carry out earnings management.In order to coordinate the interests of the management and shareholders and curb the excessive earnings management behavior of the management,the company has developed various compensation contract systems.The incentive of executive compensation is an important aspect of corporate micromanagement.The widely used executive compensation system in China calculates compensation based on earnings information in a company’s accounting records.Does high pay provide managers with an incentive to improve the company’s performance,but also encourage them to sugarcoat their reports to maximize their profits?This paper finds that the motivation of earnings management of i Flytek and Perfect World is the motivation of compensation contract.Then it begins to study the influence of the difference of compensation incentive on earnings management behavior.According to the different compensation types of senior managers,this paper divides the compensation contract into two aspects: equity incentive and performance evaluation.Through comparison and analysis,this paper draws the conclusion that:(1)the earnings management of i Flytek and Perfect World is driven by the salary contract;(2)i Fly Tek mainly adopts real earnings management while Perfect World mainly adopts accrual earnings management.(3)Before the announcement of the stock incentive plan,i Fly Tek adopted top-to-bottom earnings management to reduce the difficulty of exercising the right and adopted a series of earnings management measures to obtain higher equity returns;A perfect world would use earnings management to reduce expenses and smooth profits.The main contribution of this paper is to make a specific case analysis of earnings management of listed companies,based on the compensation contract motivation,and put forward more intuitive research results than previous empirical studies,which enriches the research forms in this field.