Research On The Effect Of Compulsory Disclosure System Of Internal Control Information On Real Earnings Management

In April 2010, the Ministry of finance, Securities Regulatory Commission, the Audit Commission, the CBRC and CIRC jointly issued enterprise internal control supporting guidelines. According to the five ministries jointly issued the notice on issuing the supporting guidelines for enterprise internal control the internal control of enterprises’(Accounting 2010 No.11) regulations, listing Corporation at the Shanghai stock exchange, Shenzhen Stock Exchange main board began in the enterprise internal control standard system since January 1,2012, the central and local state-owned listing Corporation should disclose the internal control information in 2012, the unstate-owned listing Corporation which meet the conditions should disclose internal control board in 2013.It marks that China’s internal control information disclosure come in to compulsory change. Mandatory disclosure system for the implementation of internal control information Is the rule of internal control information compulsory disclosure can improve the quality of financial reporting information, reduce the financial report information which affected by earnings management behavior, since 2012 the rule of internal control information mandatory disclosure come into effect, can the mandatory disclosure system be effective to improve the quality of financial report, especially whether decreased the level of real earnings management is to be tested.This paper uses the difference- in-differences model, studied whether the internal control information disclosure can effect on the real earnings management, First,I use the real earnings management model to establish three estimates of the real earnings management to measure real earnings management. Then according to whether the company’s first mandatory disclosure of internal control information in 2012 and 2013,the Sample Firms was divided into a treatment group and control group, using difference- in-differences model, comparison between treatment group and control group in the mandatory disclosure system differences before and after the implementation of real earnings management, so as to verify the mandatory disclosure of internal control system implementation effect. According to the results of empirical test, the policy of internal control information implementation disclosure did not significantly reduce the level of real earnings management.