The Transformation Of The Organization Form Of Accounting Firm And Earnings Management Of Enterprises

Foreign accounting firms are in a strong position in chinese audit market. Chinese certified public accountants are urged to be bigger and stronger. However, Our firm organization form limits the further development.It’s time for the Chinese ministry of finance to guide the transformation of special general partnership(SGP),Large and medium-sized public accounting firm are changing to SGP which makes auditors facing higher legal liability, Which will further affect the occupational behavior of auditors, audit quality, audit fee, earnings management and so on. Previous studies have researched on the relationship between organization form of accounting firm and audit quality or audit fee. however, There will be what kind of effects in earning management of the listed company is also worth our attention.Using the data of the Shanghai and Shenzhen stock markets between 2009 and 2012, and the empirical methods of difference-in-differences model, the paper exam the effects of the transformation of organization on earning management. We find that firstly, the transformation of audit firms can decrease the degree of accruals management. Secondly, the transformation of audit firms can decrease the degree of real earnings management. Thirdly, the transformation of audit firms will affect the manipulation of expenditures and sales, but no significant evidences on overproduction. The firms with higher reputation have more significant effects in proving financial information’s quality.These findings support the positive effects of the transformation policy. The transformation is expected to support the firms to do better in operation. The article provides us academic evidence about the effects of the transformation.This article is divided into seven parts. The first part is introduction; The second part is literature review; The third part is the theoretical analysis and the research hypothesis; The fourth part is the research design; The fifth part is the empirical result analysis; The sixth part is the case; The last part is the conclusion and prospect.