A Study On The Relationship Among Internal Control Information Disclosure,the Audit Quality And Earnings Management

Earnings management is controlled by the manager level.In order to achieve earnings goal,they do accounting policy choice,construct real transaction or control specific occurrence time.The accounting information that earnings management reflected is true but not fair.Therefore,how to reduce earnings management and improve the earnings quality has become a hot topic.Internal control as the company’s internal governance mechanism, the core goal is reasonable to ensure financial reporting and related information true and fair.And certified public accountant auditing of financial report is from the perspective of external governance to supervise manager level,so that enterprises can provide higher quality accounting information.There are less related literature studied on the relationship among internal control information disclosure,audit quality and earnings management.And research conclusions are not unified.So it provides an opportunity for the research of this paper.This article selected A-share listed companies in Shanghai and Shenzhen stock exchanges from 2011 to 2013 as research samples, chose eight control variables,such as the operating cycle, the company scale, equity concentration, refinancing, sales growth, book-to-market ratio, asset-liability ratio, actual controllers and so on.First of all,this article analyzed the relationship between the internal control information disclosure and accrual accounting earnings management,and the relationship between the internal control information disclosure and real activity earnings management.Then analyzed the relationship between the audit quality and two earnings management,and discussed the combined action of the internal control information disclosure and the audit quality to earnings management.Finally,this paper discussed the interaction between the internal control information disclosure and the audit quality when they impacted on earnings management.The results showed that the internal control information disclosure has a negative and significant correlation with accrual accounting earnings management and real activity earnings management.The audit quality was also.Besides,in inhibition of accural accounting earnings management and trade-off sales manipulation earnings management,the relationship between internal control information disclosure quality and audit quality was alternative and complementary relations;and in the inhibition of other real activity earnings management, there was a complementary relationship.To sum up,this paper not only studied the internal governance mechanisms-theinternal control information disclosure influencing on earnings management,and the effect of the external governance mechanism-auditing quality.In addition,it also discussed the interaction between the internal control information disclosure and the audit quality when they impacted on earnings management.It made the research on factors of influencing earnings management more comprehensive.It provided a basis for improving the level of internal control information disclosure and audit quality.The analysis of earnings management contained the accrual accounting earnings management and real activity earnings management,and it made the research on earnings management more comprehensive.Therefore,the research of this article had the theoretical and practical significance.