Research On Resrtaining Earnings Management Of Listed Companies In China

Earnings management as an important area of positive accouting reascher firstly began America 20 years ago. Healy and Whalen thought that Earnings management means to control or adjust the information of the financial income in the report in order to mislead the people' s decision which was maden based on the performance of companies or influences the actions which was based on numbers of accounting reports.Managers engage in earnings management for various reasons, and so there are a lot of factors influence earnings management. We state the basic theory of earnings management , and study factors affecting from the accounting firm' s position and audit term..In recent years, the reputation of CPA has been defeated by the worldwide series of financial fraud cases which often beget by listed companies. When investigator analyses reasons why registered accountants can not discover the fraud behaviors which led to the failure of audit report , they often mentioned as a factor that the long-term audit always led to the low-quality one. This means that with the growth of the audit period, auditors in the important report on the decision-making management more likely to agree with the views, should have lost the independence. Firm mandatory rotation as a possible means of improving the quality of the audit were made. Italy and Brazil have put implement mandatory rotation of accounting firms into the public firm, Singapore also requested the country' s banking firm to adopt the implementation of mandatory rotation, From 2004 Austria started to demand mandatory rotation of accounting firms, Spain and Canada had also the requirement of mandatory rotation. The view of American Department audit is that at the accounting firm level, the implementation of a mandatory rotation system may cost more than the proceeds of the results, that is, mandatory rotation of accounting firms may not be the most effective way to strengthen auditor independence and enhance audit quality. In our country' s market , it has not reached a consensus that accounting firms and the size of the surplus management of the listed companies, that China should or not follow the example of other countries to enforce a rotation system in the industry.Following those, this article begins discussing. Using Jones cross-section of accounting profit model and regressing model to positive research that the accounting firm' s position which the listed companies in China employ and the relationship between appointment time and earnings management. Positive results showed that: the former top managers of the accounting firm to conduct a surplus of management has a supervisory role, and the longer time-prone employment earnings management behavior. Finally, on the basis of the analysis, giving the recommendations for improvement of the accounting firm of their own development and regulatory aspects aiming at earnings management issues.