Board Characteristics and Earnings Management in Stock-Based Incentive: A Perspective from Listed Companies in China

摘要

Stock-based incentive has become the most popular measure to stimulate the management of listed companies in the Chinese security market. In this paper, we offer a new perspective on the relationship between board characteristics and earnings management. Measures of board characteristics include board size, board independence, CEO/Chairman separation, and extent of institutional investor ownership. We take the listed companies in Shanghai Stock Exchange and Shenzhen Stock Exchange that have exercised the stock-based incentive plans as samples. Across a variety of empirical tests,results reveal some evidence that board characteristics of listed companies with stock-based incentive are associated with earning management, either positively or negatively.