Macro Business Cycle?Real Earnings Management And Audit Pricing

Macro-economy in China is facing a much greater downturn pressure, the government tries to transform our domestic economy condition from “old normal economy” to “new normal economy” by the way of supply side structural reforms, which means a great deal to start a new chapter of economy restructure and to step into a new economy cycle. Chinese macro-economy has been slowed down since 2011 and has turned more serious in recent years, which has caused much negative impacts to the micro-enterprises who constitute the whole macro-economy. Phenomenon such as poor operating conditions, business performance declines, accounting earnings fluctuates sharply, deeper degree of earnings management happens frequently. Therefore, analyzing the effects of Chinese macro-economy cyclical fluctuation to microenterprise's behavior has realistic significance.As a core problem of accounting and finance field, earnings management has always been an important topic. Earnings management includes both accrual earnings management and real earnings management, in the practical circle, companies frequently adopt the real earnings management method to manipulate their profits, which has caused the theoretical circle pays more attention to real earnings management research. But these scholars almost conduct their research at the angle of micro level, seldom consider the possibility of macro-economy cyclical fluctuations influence company's behavior. Thus, it's not only an innovation to study the influence of macro-economy cyclical fluctuations to micro-company's behavior, but also a supplement to current research on real earnings management, and it is beneficial to a deeper understanding of how macro-economy cycle influences micro-enterprises.Based on these, this paper has adopted Chinese A share listed non-financial companies in Shanghai and Shenzhen stock market from 2007 to 2014 as research sample, choose their panel data as research object. At the background of Chinese economy restructure from “old normal” to “new normal” and Chinese supply side structural reforms, this paper has mainly conducted the following two research: firstly, whether Chinese macro-economy cyclical fluctuations will influence micro-company's real earnings management, and how's the degree; secondly, at the side of independent audit supervision, empirically analyzed how does the impact of macro-economy cyclical fluctuations to micro-company's real earnings management reflect on audit pricing, which is beneficial to study whether auditors charge different audit fee for real earnings management at different business cycle. Through theory analysis and empirical test, this paper has such main conclusions:(1) Company's real earnings management is influenced by macro-economy cyclical fluctuations. And to combined with economic expand period, their real earnings management degree is much greater in economic austerity period.(2)For different property rights, non state-owned listed companies are easier to get impacted by the macro-economy cyclical fluctuations. In economic austerity period, real earnings management degree of non state-owned listed companies are more significant than state-owned companies.(3)At different business cycle, auditors gets different audit fee about real earnings management. In economic austerity period, companies pay much more audit fee because of their greater degree of real earnings management.