Empirical Study On The Inhibition Effect Of Reputation Of Accounting Firms On The Corporate IPO Earnings Management Behavior Suppression

At present, earnings management behavior of listed companies has caused the extensive attention of domestic and foreign scholars. Listed companies using earnings management ultimately brings adverse selection and other issues. In the IPO process, the listed companies are bound by China Securities Regulatory Commission(CSRC)、underwriter and accounting firm. The regulatory power of the CSRRC to listed companies is equivalent.Accounting firms audit financial reports of distribution firm of three years prior to IPO and issue the audit reports. This provides additional assurance for the distribution firm. Underwriters are on the basis of the audit reports issued by accounting firm, consider whether to undertake the project of the company. Therefore, the role of the CPA is very important. And the high reputation accounting firms carry out a rigorous qualification review of distribution firm. Therefore, different reputation accounting firms may have different inhibitory effect on earnings management behavior of the company in IPO process.Based on the special status of the accounting firm in the process of IPO, the paper studies the influence of the accounting firm on the earnings management behavior of the listed companies in the process of IPO. Based on the theory of authentication medium and the supervision function of CPA firm, this paper analyzed the influence of the reputation of the CPA on the earnings management of the listed companies in the process of IPO. On this basis, the research object is 851 companies which listed in A shares market in China from 2009 to 2014. On the basis of the modified Jones model, accrual management is measured.The real earnings management is measured by abnormal cash flows, abnormal production cost and abnormal discretionary expense. The reputation of accounting firms is defined. This paper attempts to draw the effect of the reputation of the CPA firm on the earnings management behavior of listed companies in IPO process. According to the results of the research, combining the current market conditions, this paper put forward the relevant policy recommendations.In the course of IPO, the listed companies in our country have the behavior of the accrual management and the real earnings management. The accrual management and the real earnings management are not a substitute of the other, and the performance of the same high and low linkage relationship. At the same time, the good reputation accounting firm can inhibit the distribution firm’s accrual earnings management and real earnings management behavior, and it can effectively inhibit the mutual relationship between real earnings management and accrual management to make it adopt lower accrual earnings management and lower true earnings management. According to the conclusion of this study, from the perspective of listed companies and accounting firms, the paper puts forward the policy suggestion of improving the accounting standards and accounting system, strengthen the supervision and improving the reputation evaluation system.