Earnings Management Of Borrowing Costs-and Its Internal Control Information Disclosure

The enterprise accounting standard published by the Ministry of Finance in2006has specified the confirmation, measurement and disclosure of borrowing costs by adding No.17of the enterprise accountant standard-borrowing costs. The new borrowing costs standard has changed in aspects of the assets scope of the allowable capitalization, the loan scope, the calculation method of borrowing costs capitalization, premium and discount amortization and so on, which have brought in the corresponding economic consequences, generated new spaces for earnings management and affected the disclosure quality of enterprise accounting information, In response to the changes brought by the new standard and to ensure the truth and fairness of accounting information, establishing and perfecting the mechanism of internal control reflected through its information disclosure is the only way for the enterprises. An important aspect of this paper is to study whether the high-quality disclosure of the enterprise internal control information can inhabit the behavior of borrowing earnings management.This paper clarifies the research purpose and significance, and establishes the research contents and framework of this paper by fully summarized the study at home and abroad of borrowing costs, earnings managements and internal control information disclosure on the background of borrowing costs standard reformation. Then the paper deeply excavates the issuable economic consequences and analyses the motivations and means of the borrowing earnings management on the basis of comparative analysis of changes in new borrowing costs standard. Followed that, we analyzes the situation of borrowing costs capitalization and earnings management after the implementation of the new standard by methods of empirical research to the statistical borrowing costs distribution of selected companies’related data in2008-2010. Finally, according to the empirical results and combined with analysis of Chinese companies’ situation of borrowing internal control information disclosure, this paper studies the influence of the quality of internal control information disclosure on the behavior of borrowing costs management, and tests the effect of internal information disclosure to put forward some reasonable suggestions to enhance accounting information quality.The results show that borrowing earnings management still exists after the implementation of the new enterprise accounting standard, but the degree of earnings management of those companies disclosing high quality internal control information decreased significantly. Therefore, it’s important for the companies to improve accounting information quality by establishing and perfecting the mechanism of internal control, and increasing the disclosure quality of internal control information.