Effect Of Ultimate Ownership, Earnings Management On Audit Opinions

Since 1999, the concept of "ultimate control person" has been researched by La Porta, Florencio and Shleifer, and the ultimate property of research comes into people’s sight, many foreign scholars began to study of the ultimate property right. Chinese scholars study of ultimate property mainly base on the foreign theoretical and empirical methods combining with the actual situation of their own. Though starting late, Chinese scholars still made some achievements. There is more Chinese studying of Earnings Management at present, and the results are significant. But there is less research of the relationship between ultimate property, earnings management and audit opinion.With the rapid development of economy, the pattern of economic globalization has formed. Especially the U.S. financial crisis hit in 2008, the world economy and its pattern got bad impact. Our country’s economy was influence mildly, which does not mean that enterprise management in our country does not have any problem. Some listed companies set earnings management as an excuse to release a lot of financial reports which can not reflect enterprise’s financial position and operating conditions. Thus, certified public accountants kept independence began to play a role of "economic supervision". Although our country’s audit market developed rapidly, we still need to prove whether the increase of the number of registered accountant’s practice and the expansion of firm represents the improvement of audit quality(especially under the condition of government involvement).This article is a empirical research of the influence about ultimate property rights and earnings management to the audit in listed company in a political context, exploring the certified public accountants’ degree of reveal earnings management behavior of listed companies, in order to find the industry of certified public accountants audit quality problems, and offer a proposal how to improve audit quality in our country.this paper, using normative research and positive analysis together,research the influence of ultimate property, surplus management to the audit opinion. The article includes five parts, the first three parts using the method of the normative research, expound the theory of ultimate property, earnings management and audit opinion, and retrospective analysis the relations between and among.The fourth part make a empirical analysis on our country listed company financial data samples in 2007-2013, including correlation analysis of variables of descriptive statistics and explained variable, and logistic regression analysis. Regression results show that when the auditors are auditing, if the enterprise degree of earnings management is higher, they can identify companies earnings management and fraud; with different purposes of earnings management, the auditor can distinguish the opportunistic earnings management and decision usefulness of earnings management, and issue a different audit opinions; Ultimate property rights and the audit opinion is significantly negative correlation, which means the enterprise ultimate property level is higher,the probability of non-standard audit opinions issued by certified public accountants is smaller; Certified public accountants consider the influence of the political background when they are identifying earnings management, which makes the probability that issue non-standard audit opinions small after find the enterprise has political background,and the ultimate property of enterprise level has a big effect on auditors when they are assessing the risk level and importance. Because they may take more audit risk, auditors will respond strongly to the ultimate property level. The fifth part, based on the above empirical analysis, tries to put forward relevant policy recommendations, and find out the insufficient of this paper.In the process of research, the author made efforts in the following aspects. Ultimate property related data is collected by author and processed according to different industries. In the empirical part, the ultimate owner regarding as the ultimate property owner, using operating the absolute value of the accrued profit to show the company’s earnings management degree, respectively based on the analysis of the audit opinion and the ultimate property types group, finally according to influence of the ultimate property and earnings management to the audit opinion, comprehensively analyzed the situation where the ultimate property and the earnings management exist at the same time, certified public accountants tolerance will change or not by different degrees of earnings management. The last part, the suggestion of concrete Suggestions are put forward according to the above research results.