Going Concern Opinion And Earnings Management

As one of the four major accounting hypotheses, going-concern hypothesis occupies the fundamental position in accounting. However With the intensification of market competition, enterprises are the condition between going-concern and nongoing-concern so that the applicability of going-concern hypothesis is often questioned. Once the auditors detect the going-concern uncertainty, the CPA is likely to issue Going Concern Opinions (GCO) with reflecting on the audit report. According to the disclosure results of annual reports audit, going-concern uncertainty is becoming the main reason among all modified audit opinions. Audit opinion, as a result of CPA audit work, impact on the business activities of the direction and degree, which brought attention of the investors and researchers. Given the above, this article will continue to study audit opinions and its impact on earnings management, in order to provide theoretical guidance to government regulation and related advices to this type enterprise.We use technique of combining literature research and empirical research, is divided into six chapters. First of all, research trend of GCO and earnings management is summarized, including the related classic literature and cutting-edge research. Secondly, it introduces GCO and earnings management related theory, including the concept of GCO, current status, economic consequences and explaining the meaning of earnings management, generate motivation, means of operations and its influencing factors. We analyze the influence from three aspects:financial difficulties, audit deterrent effect and improvement of going-concern ability. Based on this hypothesis we take2007-2012A-listed companies as samples, with earnings management as the explained variable, GCO as explained variable to establish multiple linear regression model, to analyze the relationship between GCO and earnings management from the empirical aspects. The empirical regression results show that the GCO has inhibition effect on earnings management. Finally, based on the research conclusion, we put forward related policy recommendations. Contribution of this paper:First, This paper focused on the impact of GCO upon earnings management and further enrich the earnings management influence factors. Second, We put forward several related regulations about further government supervisions and information disclosure requirements. This article have limitations:First, the empirical method is relatively simple and control variable Settings is also inadequate. Second, this explanation variable settings is not comprehensive, which needs further research to perfect.