Executive Compensation and Real Earnings Management: Perspective of Managerial Power
Abstract
From the perspective of managerial power, this paper uses the A-share listed companies from Shanghai and Shenzhen Stock Exchange as samples, during 2011 to 2015, and establishes the multiple regression model to test the relationship between executive compensation and real earnings management. The results show that there is a significant negative correlation between the monetary compensation and real earnings management; while the equity incentive for executives is positively correlated with the real earnings management, generally shows the opportunistic tendencies of executives; after introducing the variable of managerial power, the management power will weaken the negative correlation between monetary compensation and real earnings management, but it will not change the positive correlation between equity incentive and real earnings management.
Keywords: Real earnings management, Monetary compensation, Equity incentive, Managerial power.
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