Research On The Influence Of Internal Control On Earnings Management

Family business, as a traditional form of organization, plays an increasinglyimportant role in the world economic system in the continuous development of morethan two hundred years after the industrial revolution. In China, the family controlledenterprise is no longer a few. Since the speed of family business development is evenmore than the state holding enterprises especially after the reform and opening up,family business become more and more important in the development of the nationaleconomy. However, many important problems can not be ignored in family business,such as financial chaos, appoint people by favoritisms, the problems of internalcontrol. These problems make the life of Chinese family business be short comparedwith western developed countries. How to extend the life of family enterprise life andmake it better in the development of the national economy, which makes scholarsgradually shift attention to internal control and earnings management of familycontrolled listing Corporation. Therefore, the paper that takes the family controlledlisting Corporation as the object of study in order to understand the internal control offamily controlled listing Corporation impacts on earnings management, has theextremely vital significance to the development of China’s economy.Firstly, sorting out the domestic and foreign literature and listing the relatedtheoretical knowledge, lay the theoretical foundation for this paper. Secondly, Thispaper divides the earnings management into accounting earnings management andreal earnings management activities, and proposes the research hypothesis. Thirdly,this paper draws on Su Qilin and Zhu Wen (2003) on family enterprise standards,obtaining394family controlled listing Corporation as the sample of this studythrough screening the data of Listing Corporation in2012. The paper use the modifiedJones model, operating activities cash flow model, cost model and discretionaryexpense model to measure the earnings management, the internal control index tomeasure internal control. The paper uses SPSS software to analyze the relationshipbetween internal control and earnings management, and verify the research hypothesis. Finally, according to the research conclusion, put forward to the advices aboutimproving the family controlled listing Corporation internal control system to restrainthe earnings manipulation.