The Empirical Study About The Influence Of Internal Control Information Disclosure Of Listed Companies On Earnings Management

In recent years, a series of business failures and financial fraud happened inwell-known enterprises of our country. It shows that the internal control in corporategovernance is weak and lack of internal control information disclosure. The disclosureof internal control information attract theorists and practitioners attention..It is worth ofresearching corporate’s internal control. The reliability of financial data in the financialreporting depends largely on the listed company’s internal control.At the same time, thereliable accounting surplus is affecting investment decisions of investors. In recent years,numerous studies show that the disclosure of internal control of listed companies havean impact on earnings management.There are five parts in this paper.The first part is about introduction.It introductsbackground, significance and current studies of internal control information disclosureon earnings management. It also include research method and the new points. The seco-nd part primarily introducts the theory on internal control information disclosure,whichincludes the theory of Principal-Agent, theory of information asymmetry, theory ofsignaling and the theory of efficient capital markets. The third part is the fact or analysisabout disclosure of internal control information affecting earnings managem-ent. Theinternal control self-assessment report and on the internal control audit report are mainfactors. The fourth part is the empirical study. We select the sample company data fromShanghai stock exchange in2012,which have disclosed the internal control information.In order to test the internal control information disclosure can effectively restrict thecompany’s earnings management, multiple linear regression and paired samples T-testanalysis method are used to research the impact of internal control selfa-ssessmentreport and internal control audit report on earnings management. The fifth part is theconclusion. According to the study, we find that the disclosure of internal control self-assessment report and earnings management is negatively correlated,the s-ame asthe disclosure of internal audit report. This indicates that disclosure of internal controlinformation of listed companies can effectively suppress corporate earnings management. The more internal control information disclosed, the smaller of earnings managem-ent will be. By the study, it can help government regulate the disclosure of internal control information of listed companies. Besides,it will help investors identified potentialearnings management behavior and protect theirs benefit.