Research On The Impact Of Real Activity Earnings Management On Audit Expenses

In recent years,with the deepening of the capital market reform and the continuous improvement and improvement of accounting standards and regulatory system,senior executives of listed companies are fully aware of the importance of earnings management in real activities,and actively take effective measures and methods to effectively control the earnings through real activities.In fact,real activity earnings management will further weaken the authenticity and clarity of financial reports to some extent,which will easily lead to the failure of stakeholders' investment decisions or other losses.In addition,companies that carry out earnings management of real activities tend not to disclose relevant information,so it is difficult for external stakeholders or supervision institutions to find out such activities of companies.In order to protect the relevant interests of the users of financial reports,whether certified public accountants audit,as the most direct and effective external supervision means,can detect the existence of real activity earnings management behavior of the company,identify this risk factor and take it into consideration when making audit fee decisions is a problem worthy of the attention of the stakeholders of the company.The research on the relationship between real activity earnings management and audit expenses is not only to discuss whether certified public accountants can recognize real activity earnings management in practice,but also to deepen and refine the factors that affect audit expenses,which is of certain significance to standardize audit fees.At present,there are a lot of researches based on accrual earnings management and audit cost,and many excellent research results have been obtained,which lays a strong foundation for the follow-up research.However,there are few studies on the relationship between real activity earnings management and audit cost.Western countries have been very mature in this area of research.Some scholars believe that real activity earnings management will increase the difficulty of audit work,which will lead to the increase of audit workload and eventually affect the level of audit fees.However,some scholars believe that when considering the impact factors of audit fees,certified public accountants do not involve real activity earnings management.The reason is that although it deviates the company's earnings from the actual situation and hinders the company's further development,no corresponding norms and systems have been issued to restrain this behavior.To sum up,there is no consensus on earnings management of real activities and audit costs abroad.Chinese experts still have little authoritative research in this field,and the real activity earnings management in China's unique capital market and audit market has certain particularity.Therefore,this paper further verifies the relationship between the two in China's market through the data of a-share listed companies.This article is based on the principal-agent theory,asymmetric information theory,and the theory of audit risk,analyzes the real surplus management activities influence on audit fees,and on the basis of the discussion in the "top ten" and " non top ten" certified public accountants under the background of the change of relations between the two,and as the extension of CPA audit term will make the relationship between more and more obvious.A large number of empirical results further confirmed that there was a significant positive correlation between the two,which was more significant in the context of "top ten" firms and when the audit term was longer.The results show that in practice,CPAs do pay attention to the earnings management of the auditees' real activities and take it into account when charging.