Research on the Impact of Performance Compensation Commitment on Backdoor Listing Companies Earnings Management

Abstract

Based on the data of Chinese A-share listed companies during the period from 2007 to 2016, this paper examined the impact of the performance compensation commitments in backdoor listing on corporate earnings management. The empirical results show that performance commitments have increased backdoor listed companies' earnings management level; the promised performance growth rate is positively correlated with earnings management level; share compensation has a stronger impact on earnings management than cash compensation. In addition, compared with state-owned enterprises, the association between performance compensation commitments and earnings management is more pronounced in non-state-owned firms.