Property Rights Nature,earnings Management And Audit Fees

Earnings management is the operation carried out by listed companies within the permission of accounting standards and systems,while earnings manipulation is a reflection of the moral corruption of enterprise management and financial managers.Improper earnings management makes the financial statements of enterprises false.Therefore,in the capital market,investors are most concerned about the quality of earnings management.The establishment of audit system helps to supervise the earnings manipulation of enterprises.Auditors can not only make the quality of financial information of listed companies better,but also restrain the self-interested behaviors of enterprise executives.Earnings manipulation will bring inspection risk,inherent risk,etc.According to the principle of risk and return,the auditor will increase the audit cost;Increasing audit procedures to identify earnings manipulation also requires more time and effort on the part of the auditor,which is compensated by higher audit fees.Due to the economic transformation in recent years,the political system and regulatory power faced by state-owned enterprises and non-state-owned enterprises have always been different.Studies have shown that compared with non-state-owned enterprises,audit premium caused by risk taking is less likely to occur in state-owned enterprises(zhu et al.5 2018).In view of the above considerations,this paper will inspection the relationship of earnings management and audit fees to test whether auditors can price the corresponding audit services for different ways and degrees of earnings management.At the same time,it examines the moderating effect of the property right nature of listed companies on the relationship between the two,and examines whether the property right nature of auditees will affect the relationship between earnings management and audit expenses.Based on the sample data of a-share superior companies in Shanghai and Shenzhen stock exchange from 2011 to 2015,this paper USES the method of empirical analysis to study the correlation between earnings management and audit costs.On the basis of studying the correlation between earnings management and audit costs,this paper takes the nature of property rights as A moderating variable to study its impact on the correlation between earnings management and audit costs.Although studies have been conducted the contact of earnings management and audit fees,the conclusions have not been unified.This paper considers the risk factors of cash flow,and controls the impact of annual and industry factors,supplemented by the robustness test,the empirical results are more rigorous.In addition,in view of the potential particularity of state-owned enterprises,this paper divides the nature of the main controller into state-owned holding and non-state-owned holding,and conducts a regression analysis to investigate whether the property right nature of enterprises has a moderating effect on the relationship between the degree of earnings management and audit expenses.This is a blank in the field of earnings management and audit cost relationship.This paper takes the theory of the determinants of audit expenses as the theoretical basis,leams from the literature of previous scholars,collects and sorts out the sample data and USES the method of empirical analysis to verify the hypothesis of this paper.The findings are as follows:(1)there is a positive correlation between the degree of earnings management of listed companies and audit expenses.(2)there is no significant relationship between the property right nature of the enterprise and the audit fee.(3)compared with non-state-owned enterprises,the positive correlation between the degree of earnings management of state-owned enterprises and audit expenses is weakened.In conclusion,On the one hand,the conclusions of this paper can help the public and investors to further understand the impact of earnings management on auditors,so as to examine the financial status and operating status of listed companies.On the other hand,Which provides support and evidence to reform audit and development in the capital system,which is helpful to provide policy improvement Suggestions for relevant supervision institutions.