China’s Listed Companies Earnings Management And Independent Audit Quality Relationship Of Empirical Research

In recent years, an increasing number of China’s listed companies use earningsmanagement in the preparation of financial statements, especially during the initial publicoffering of shares, again allotment and issuance of stock, as well as losses to reverse, mostof the listed companies have earnings management behavior. Listed companies’ earningsmanagement behavior makes the financial statements of earnings information not a truereflection of the actual situation, cannot effectively reflect the company’s true operatingresults and financial position and users of financial statements cannot rely on financial datato make more effective decisions. All the listed company earnings management behaviorgreatly damage the vital interests of many investors, and give a serious impediment to thenormal development and functioning of the securities market in China. Has been listedcompany’s financial fraud cases, mostly related to certified public accountants to auditlisted companies’ earnings management behavior of invalid and disregard a greatrelationship, and even some certified public accountants and management collusion fraud.Therefore, CPAs how we to improve the quality of audits, effectively maintaining auditindependence, inhibition of listed company earnings management behavior to a certainextent, is a finance and audit areas is a very important subject. In this background, thispaper aims to study listed company’s independent auditor quality and earningsmanagement relations, so as to determine whether the certified public accountant can auditthe Department listed companies earnings management behavior, and judge the truereflected in the audit opinion. To help users of financial reports to determine the listedcompanies’ financial information whether exist of earnings management behavior by thetype of audit opinion in the audit report; confirming control measures as an external auditof listed companies can effectively suppress the earnings management behavior to play abetter auditing supervisory role.This article.suggested the following two assumptions through reviewing of theliterature at home and abroad, by analyzing the General motivations and methods ofearnings management of listed companies, combined with the concept of audit quality,metrics, and factors affecting the quality of Auditors, independent audit quality on earningsmanagement of listed companies in China and the relationship. One is certified publicaccountant had played an important role in inhibiting behavior of earnings management ofthe listed companies, accounting firm for higher levels of earnings management of the listed companies ’ financial reports, issued the likelihood of non-standard audit report; bythe non-top ten "CPA audit listed companies than by the" top ten "accounting firms auditthe extent of earnings management of listed companies to a large. By empirical dataanalysis, the conclusions drawn in this article: the absolute value of the accrued profits ofthe listed companies controlled audit opinion type there is a positive correlation betweenthe statistics published with the accounting firm, that is to say for the listed companyearnings management behavior, CPAs can identify and reaction to the audit report; Foraccounting firms, non-top ten have a higher audit quality compared to the "top ten"firms.