Studies On Relationship Between Internal Control And Earning Management

With the growing prosperity of China's securities market, listed companies issue earnings management is gradually apparent. This has become the focus of China's accounting theory and practice attention. As the object of earnings management accounting information, accounting information and internal control of listed companies are closely linked. Besides, "the basic norms of internal control", and matched the "Guidelines for Internal Control of Listed Companies (Draft) "has just been introduced in 2008, it is of great theoretical and practical significance to study the deep relationship between earnings management and internal control by means of empirical test. It will also facilitate listed companies to strengthen internal controls and inhibit the earnings management.Firstly this paper introduces the means of earnings management and internal controls and their theoretical foundation. Then it analyses the relation between them. Then it test the correlation between earnings management and internal control in 2008 non-financial listed companies in Shanghai Stock Market A stock target, by means of descriptive statistics, mean difference tests and multiple linear regression method. Empirical research is the core of this paper. It has two parts. The first part is an empirical measurement of earnings management. The first part is an empirical measurement of earnings management research. Based on evaluation model of accrued profit, the paper elects the adjusted Jones model. After tested and adjusted the model, the paper measures earnings management. The second part is empirical research the impacts of internal control of sample companies on earnings management. Empirical results show that high-quality internal control will play a role in restraining the earnings management of listed companies. The company's inherent characteristics and treatment factors may influence the listed company's internal control and earnings management.Finally, according to the conclusion of the empirical research, this paper gives some suggestions for the problems of current internal control. It suggests that it is important to establish a sound internal control system and internal control disclosure system, pay close attention to listed companies to develop internal control auditing standards, and strengthen internal control of listed companies and the CPA self-assessment report of the audit supervision and management.