Share This Article:

An Empirical Study on the Effects of Equity Incentive of the Listed Corporations in the SME Board of China
—An Empirical Analysis Based on the View of Earnings Management

Abstract Full-Text HTML Download Download as PDF (Size:139KB) PP. 26-31
DOI: 10.4236/ti.2014.51004    5,891 Downloads   7,828 Views   Citations
Author(s)    Leave a comment

ABSTRACT

Currently, most researches are focusing on Shanghai & Shenzhen exchange, and few researches have been done on the SME board. Besides, while studying the effect of equity incentive, most of the researchers have ignored the earnings management triggered by stock ownership incentive. This paper takes the SME board companies which have implemented stock ownership incentive as the research object. We have used earnings management to modify the company performance and carried out an empirical research to study the effect of stock ownership incentive. Our result shows that without earnings management to modify the company performance, stock ownership incentive is positively related to company performance. Taking the earnings management into account, the positive correlation relationship between stock ownership incentive and company performance will be weakened, and stock ownership incentive will stimulate earnings management.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

L. Xu and W. Cui, "An Empirical Study on the Effects of Equity Incentive of the Listed Corporations in the SME Board of China
—An Empirical Analysis Based on the View of Earnings Management," Technology and Investment, Vol. 5 No. 1, 2014, pp. 26-31. doi: 10.4236/ti.2014.51004.

References

[1] M. Jensen and L. Senbet, “Resolving the Agency Problems of External Capital through Options,” Journal of Finance, Vol. 36, No. 3, 1981, pp. 629-691.
[2] H. Mehran, “Executive Compensation Structure, Ownership and Firm Performance,” Journal of Financial Economics, Vol. 38, No. 2, 1995, pp. 163-184.
http://dx.doi.org/10.1016/0304-405X(94)00809-F
[3] C. P. Himmelberg, R. G. Hubbard and D. Palia, “Understanding the Determinants of Managerial Ownership and the Link between Ownership and Performance,” Journal of Financial Economics, Vol. 53, No. 2, 1999, pp. 353-384.
[4] G. Wei, “Incentive for Management and Performance of Listed Companies,” Economic Research Journal, No. 3, 2000, pp. 32-40.
[5] Z. Q. Li, “Incentive Mechanism and Corporate Performance,” Accounting Research, No. 1, 2000, pp. 24-31.
[6] B. Gu and L. Y. Zhou, “Study on the Effect of the Implementation of Stock Incentives by Chinese Listed Companies,” Accounting Research, No. 2, 2007,pp. 2-12.
[7] G. L. Liu and J. S. Wang, “Positive Analysis Listed Companies: Equity Structures, Incentive Systems, and Preformances,” Economic Theory and Business Management, No. 5, 2000, pp. 40-45.
[8] Q. Cheng and T. D. Warfield, “Equity Incentives and Earnings Management,” Accounting Review, Vol. 80, No. 2, 2004, pp. 441-476.
http://dx.doi.org/10.2308/accr.2005.80.2.441
[9] D. Bergstresser and T. Philippon, “CEO Incentives and Earnings Management,” Journal of Financial Economics, Vol. 80, No. 3, 2006, pp. 511-529.
http://dx.doi.org/10.1016/j.jfineco.2004.10.011

  
comments powered by Disqus

Copyright © 2019 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.