Government Audit Result Announcement And Earnings Quality Of State Owned Enterprises

Shareholders and creditors concern most about the corporate earnings information in the market.Earnings information can tell the enterprise's development ability,and it can help the stakeholders to make right decisions.Our country takes the public ownership as the main body of the economic system,state-owned enterprises play the most important role in the national economy.Under the new economic background,the Chinese government is taking a series of measures to strengthen the function of government audit,in order to improve the quality of information disclosure,so as to complete the reform of state-owned enterprises.Among these measures,the audit results announcement policy can guarantee the quality of earnings information,because it can supervise the information disclosure.Since 2006,every year the Audit Commission publishes a number of audit results announcements of large state-owned enterprises.93 audit results announcements have been announced for state-owned enterprises in the all 230 reports till the year 2015.In this paper,we use the government audit results announcements to analyze the impact of government audit on the quality of the earnings information of the state-owned enterprises.The issuing of the audit results announcement not only directly affect the corporate,but also lead to market reaction.Therefore,we did the research from two dimensional perspectives: market-reaction perspective the real-quality-of-enterprise perspective.The former inspects whether the extent of the earnings information reflecting the real economic situation of the enterprises has been changed.And the latter studies whether the government audit will affect the trust of investors in the market to the quality of earnings information.In this paper,we use the audit report of the state-owned enterprises published by the Audit Office during 2010-2015 as sample.After empirical research,we have the following conclusions:(1)Government audit will trigger a negative market reaction;(2)For market-reaction perspective,the earnings response coefficient is improved after the government audit;(3)For the real-quality-of-enterprise perspective,the the degree of earnings management is reduced after government audit.