Abstract: Excessive executive compensation in stateowned listed companies, especially in monopolistic industries, has recently attracted more public attention than ever. Much domestic and international literature indicates a correlation between managerial power and executive compensation and also between executive compensation and earning management. However, research on the correlation between managerial power and earning management continues to be scarce. In fact, it is mainly due to the absence of owner and managerial power that earning management is dominant in the stateowned companies of monopolistic industries. Exploring 873 samples of 178 listed companies of 14 monopolistic industries during 20022009, this paper argues that there is a positive correlation between managerial power and executive compensation in monopolistic industries in China. Executives utilize their power to maximize their own interests in earning management.