An Empirical Study On The Relationship Between Auditing Opinion And Earnings Management

Along with the development of our stock market, the phenomenon of earnings management in the enterprises is getting more and more common, the earnings management problem receives more and more attention. But the CPA audit as the key link of corporate governance, has the important examination function to the earnings management. The auditing opinion is a kind of signal transmission of a listed company implicit information, it is the important sources of information to the users of financial report. Only high-quality audit can increase the credibility of financial report, reduce asymmetrical information among company insiders, investors and other users. So, it can also increase the economic value of the company. Presently, the illegal phenomenon happened frequently which the CPA participates in the financial fraud, expresses the inappropriate auditing opinion. The large-scale firms also did not show the higher audit quality. The problem whether the auditing opinion can discover the earnings management, whether the large-scale firms are better than the small-scale firms in this part is doubted by the theorists, the practical realm and the general investors. According to this problem, this paper studied the relationship between auditing opinion and earnings management, and the influence of auditor size on it. We used the methods of canonical analysis and the empirical analysis. First of all, we analyze the relationship between auditing opinion and earnings management, and the influence of auditor size on it on the basis of previous research comments. Then, we select Chinese listed companies in 2004-2006 as the sample, through the creation of regression test model to do the empirical research on the relationship between auditing opinion and earnings management, and the influence of auditor size on it. We also carried on the further analysis to its real empirical result. We found that there is not remarkable relationship between auditing opinion and the earnings management, the CPA can't discover or report earnings management fully. The auditor size doesn't have remarkable influence on the relationship between auditing opinion and the earnings management, there are not differences between large-scale firms and small-scale firms on the revelation of auditing opinion to the earnings management.