The Empirical Research On The Impact Of Internal Audit Independence On Earnings Management

Since the 1980s,earnings management has become one of the keys in the modern accounting theory research.The object of earnings Management is accounting information and the full accounting information systems plays an important role in reducing the asymmetrical information.In our modern corporate system,the independence of the internal audit department mainly controls the problem of the asymmetrical information and the conflict of interest in principal-agent theory agency,while accounting earnings of the corporate is the main focus of interests of all sides in principal-agent theory.So this article attempts to take a standard analysis and empirical analysis from the view of the impact between the independence of listed companies' internal audit department and the earnings management.This article mainly uses the methods of theoretical analysis and empirical research and theoretical.It first introduces the independence of internal audit,the relationship between the organization model and the independence of internal audit department,the motive,means,and the theoretical basis of earnings management,as well as the reasons for its existence,and from the point of the standard analysis it draws the conclusion that the higher the independence of the internal audit department,the greater limit of the earnings management appearing in company's management.By describing the measures method of earnings management,this article selects a cross section Jones model as a measurement method earnings management.Then by taking the subordination organization of listed companies' internal audit department as a frame,it addresses the supposition that the independence of internal audit has a negative relevance with the earnings management. Then,this article selects the data of China's Shanghai A shares' listed companies which set up internal audit departments in 2005-2007 as the sample,and takes a analysis by using EXCEL and SPSS software.Using operated accruals as alternative variables of earnings management,it can analyze the influence between the independence of the internal audit department and earnings management systematically.It also compares the empirical results in 2005-2007 by using sample descriptive statistics,independent sample T test, multiple-linear regression analysis and so on.Finally,it draws the conclusion that there is a remarkable negative relevance between the independence of internal audit and the earnings management.This article also analyze influencing factor about the independence of internal audit,and brings up the suggestions that listed companies should raise deepen their understanding of the internal audit,while it can set up the audit committee to enhance the independence of internal audit and give some suggestions about controlling the earnings management of companies.