Study on the Top-managerial Compensation Incentives and Earnings Management of Chinese State-owned Listed Companies

By obtaining a sample of Chinese state-owned listed companies,this paper studies the relationship between top-managerial compensation and earning management from the impact of earning management on top-managerial compensation and sensitivity of performance-related compensation.The empirical examination finds that,in the case of the discretionary total accruals adjusted to increase reported earnings,there is a significant positive correlation between executive annual pay and earnings management,earnings management is positively related to top-managerial share incentives,in addition,earnings management has positive effect on sensitivity of performance-related compensation.Based on that,we put forward a series of suggestions to control earnings management effectively in the end.