Experimental Research on the Interaction of Governance Mechanism, Information Mechanism, Compensation System and Earnings Manipulation

摘要

In this paper, we build market environment involving symmetric and asymmetric information based on experimental economics research method. We are aiming to study the three factors that affect the earnings manipulation, which are salary system, reputation mechanism and information costs. We also focus on the mutual and replaceable relationship among these three factors. Several conclusions below are drawn from experimental results. A) Asymmetric information may disturb market order, and the more asymmetric that information is, the less market regulators influence on earnings manipulation. B) Information holders are able to avoid risk with information in hand, in spite of failing to gain extra yield. C) Managers are likely to make decision of earnings manipulation depending on random inspection Sampling Probability instead of penalties. D) Under the existing market mechanism, managers who regard their reputation cannot take high yield. E) It is the amount of fraudulency and the frequency of being inspected that determine the yield. F) Salary contracts can reflect managers' risk appetite, but probably cannot inhibit the cheatings effectively.