An Empirical Study On Audit Quality And Earning Management In Chinese Listed Companies

At present, Listed companies of our country carry on earnings management is more and more general, they often carry on earnings management (mainly handle discretionary accruals) in IPO, ration shares, increase issues in stocks and make up deficits. Earnings management makes companies' earnings information deviate from the reality, with false reflection of companies' financial situation and business performance. Furthermore, it's unfavorable for users of accounting statements to decide correctly. Earnings management is overflowed in the listed companies, so the interests of the investors is seriously harmed, which has hindered the standardized operation of the security market of our country. The incident of financial fraud have frequently occurred, and the CPA is indifference and ineffective management to earnings manipulation of listed companies accounting, and even is related to the corrupt management, therefore, how to maintain the independence of the audit, raise the quality of auditing, to a certain extent inhibit or prevent corporate earnings management audit of the area is an important subject. Based on this background, this paper aims at whether the CPA reflected management behavior on the type of audit opinion through determining the relationship between the quality of audit and earnings management, then users can through the audit reports to judge the type of audit opinion whether exists earning management, while recognizing that the capacity of the external audit controls the management, playing a better audit function.This paper reviews the relevant documents both at home and abroad in this text, defines audit quality, analyses factors that will affect the audit quality; introduces motivation of earnings management, means of earnings management and confirms earnings management in empirical study; analyses the correlation between earnings management and auditing quality. it proposes two researches supposing, supposing 1: CPA can recognize the earnings management to a certain extent, and produce non-audit opinion to the company of large degree of earnings management; supposing 2: The earning management of the listed company that audit by "Top10" is smaller than by the "non-Top10". then analyze by multiple regression. The result of study is: make regression models between the ratio of abnormal accruals and the auditing opinion, and the discretionary accruals is statistically positively correlated to auditing opinion, which means that CPA in China can audit earnings management; "Top10" have a higher independent audit quality than "non-Top10".