The Impact Of Internal Control Disclosure On Earnings Management

In recent years, a series of regulatory policy on the capital market in our country have putforward the requirement of internal control information disclosure of listed companies,and ithas indicated that the listed companies have entered the period of mandatory disclosure ofinternal control information.Will the disclosure of internal controls information bring goodeconomic consequences for quality of the financial report of listed companies? From the pointof earnings management, this thesis attests the effect of internal control disclosure inempirical way.According to the common theory of the effect of internal control information disclosureand the causes of earnings management,this article builds the analytical framework aboutinternal control information disclosure andearnings management on the basis ofprincipal-agent theory,the incomplete contract theory and information asymmetrytheory.According to the regulatory status of listed companies in our country, I divide theperiod of internal control information disclosure into voluntary disclosure of internal controlinformation and mandatory disclosure of information,then analyze the impact of internalcontrol information disclosure on earnings management. First of all, regression analysis isconducted with data of earnings management from2008to2010of both domestic andoverseas listed companies to research earnings management on voluntary disclosure ofinternal control information system background. Secondly, this article analyzed thecomparison of earnings management on the two different internal control informationdisclosure supervision status in the descriptive statistical method.At last,the2008year onbehalf of the voluntary disclosure of internal control information period and the2012year onbehalf of the mandatory disclosure of internal control information period, I takes the earningsmanagement of both domestic and overseas listed companies as research sample to study thatthe earnings management of the mandatory disclosure of internal control information hasobvious difference compared with the voluntary disclosure internal control information byusing two paired samples of methods Wilcoxon signed rank test.Based on the empirical results in this pape,the conclusions of this study asfollows:Firstly,the level of information disclosure of internal control of both domestic and overseas listed companies has been raised, but the initiative of voluntary disclosure of internalcontrol information was still not strong;The listed companies which have good quality of theinformation disclosure of internal control have lower level of earnings management than anyother company’s. Secondly, It were effective that regulators require the listed companies tomandatory disclosure of internal control information.The mandatory disclosure of internalcontrol information compared with voluntary disclosure has lower discretionary accruals inthe condition of mandatory disclosure of internal control information regulation.