The Study Of The Relations Between Private Listed Company’ Internal Control Information Disclosure And Earnings Management

The phenomenon of Chinese listed company’s management taking Earnings Management to modify the financial statements is very common, earnings management behavior not only harms the interests of investors, but also hinders the sustainable development and prosperity of the capital market. One of the goals of the internal control is to ensure that the financial reporting information is true and complete, by the means of setting internal control system, company can restrict management to discharge the responsibility to provide complete and reliable financial information, thereby enhancing the level of internal control information disclosure is extremely urgent. Domestic-related departments have promulgated a number of rules and norms to improve the level of internal control information disclosure, in 2011 five ministries require that 2012 Mainboard-listed companies must implement the basic norms and related internal control guidelines in 2012, the internal control system has been initially established.In view of the important position of private enterprises in China’s economy in and its serious phenomenon of earnings management, the paper selects 2011-2012 Mainboard-listed private companies to study, explores how the internal control information disclosure to impact earnings management. Currently for the analysis of the relations between the internal control information disclosure and earnings management focuses on the period before the formation of internal control system, however, after the implementation of the new system, the relationship between the them has yet to be tested, so this paper takes the opportunity to study their relationship, at the same time test the effect of the new system.Firstly, the paper collates and analyzes the relevant literature, defines the concept involved in the article, on the basis of the theoretical analysis presents the three assumptions. Secondly carries on the research design, according to the first hypothesis, use the modified cross-sectional Jones model to estimate the discretionary accruals to measure earnings management, use the Dibo index to measure the internal control information disclosure, introduce the six control variables to establish multivariate linear model. Finally, use the SPSS 19.0 software to empirical analyze, for the second and third hypothesis, respectively use the internal control disclosure index and the level of earnings management by year for the paired samples T-test. Ultimately concluded:internal control information disclosure can inhibit private listed companies’earnings management behavior, after the implementation of the internal control norms, private listed companies internal control information disclosure levels are not significantly increased, but earnings management situation has been significantly improved, propose some recommendations to improve the information disclosure of internal control according to the conclusion.