Supplier/Customer Relationship Transaction,Auditor Choice And Real Earnings Management

Chinese enterprises present high demand of the transaction mode which is under the relative net between suppliers and customers in recent years.This trading model can significantly improve the efficiency of cooperation,optimize the intermediate links of transactions,and help enterprises establish their own relationship network and trust system.In order to obtain more relationship specific investments and maintain the stability of relationships with suppliers and customers,enterprises often rely on earnings management to communicate positive signals to the external suppliers,customers and other stakeholders.As the external supervision mechanism,auditing plays the important role of supervision in supplier/customer relationship.Suppliers,customers and other stakehol?ders pay high attention to the auditing information to judge whether to carry out long-term and stable cooperation with enterprises.A large number of studies have shown that large firms,as the representatives of high-quality audit,can effectively restrain the real earnings management behavior of enterprises,but whether the supplier/customer relationship transaction will weaken the inhibiting effect of large firms on the real earnings management behavior remains to be further explored.The studying object of this passage is the impact of supplier/customer relationship transaction and auditor choice on real earnings management.On the basic of stating predecessors' study and relative theories,the paper selects 36876 samples from stock markets of Shanghai and Shenzhen between the year of 2007 and 2017 as objects of study.The real activity earnings management is explained variable,and supplier/custo-mer relationship transaction,the top ten accounting firms and interaction item between supplier/customer relationship transaction and the top ten accounting firms are explain-ing variables.It borrows the study methods of Fang Hongxing(2016)and Wang Jing et al.(2013)and it explores the impact of supplier/customer relationship transaction and auditor choice strategy on the quality of accounting information.The result of research shows that,on the one hand,the rate of supplier/customer relationship transaction is higher,the level of real earnings management action is higher.On the other hand,study shows that top ten accounting firms can restrain real earnings management action of the companies,but the supplier/customer relationship transaction would weaken this restrain of top ten accounting firms to real earnings management action.This paper enriches the literature on the economic consequences of the influence of"relationship" culture.The research conclusions can strengthen the perception of supplier/customer relationship transaction,and it reminds investors to be alert to the potential risks of accounting earnings information.It also reminds auditors to implement stricter auditing procedure and enlighten supervision department to perfect information disclosure system.