Research On Real Earnings Management?Internal Control And Expense Stickiness

Opportunistic behavior caused by agency problem will cause expense stickiness,in other words,there is the phenomenon that managers bring unnecessary costs for their own profit.At this time,the company's profits decline at an accelerated pace,as a result of avoiding compensation penalty and reputation damage,managers tends to adopt earnings management to reduce the increased cost due to opportunistic behavior and hide self-serving behavior.However,the gradual improvement of accounting standards and the continuous strengthening of supervision have gradually reduced the space for managers to use accrual earnings management,and managers are more willing to make use of real earnings management to directly reduce expenses,in other words,managers will reduce the expenses that bring long-term performances to the enterprises to cover up the increased expenses caused by unnecessary costs.Real earnings management has a greater negative impact on the long-term operating results of the company.As an effective mechanism to ease the agency problem,whether internal control affect the relationship between real earnings management and expense stickiness.Based on this,it is necessary to study the relation among the real earnings management,internal control and expense stickiness.This paper takes China's listed Shanghai and Shenzhen stock exchange's A-share manufacturing industry companies from 2013 to 2017 as research samples,and empirically tests three questions : Firstly,whether there is expense stickiness in China's manufacturing industry;secondly,whether real earnings management will impact expense stickiness;thirdly,whether internal control will impact the relationship between real earnings management and expense stickiness.The research conclusion shows that the manufacturing industry in our country has the characteristic of expense stickiness.There is a negative correlation between real earnings management and expense stickiness,that is,the higher the degree of real earnings management is,the lower the expense stickiness will be.High quality internal control will improve the extent to which real earnings management can reduce expense stickiness,and the expense stickiness has decreased,indicating that the unnecessary cost brought by managers for their own profit has decreases,and the expense of bring long-term performance to enterprises has increased.Theresearch in this paper clarifies the internal mechanism among real earnings management,internal control and expense stickiness,and it is helpful for the government departments to improve the execution of the internal control system of the enterprise by giving full play to the external driving role of supervision and the internal driving role of the enterprise,and to urge the enterprise to continuously improve the internal control and perfect the internal control standard system by improving the internal control evaluation system,and it is helpful for the company's owner to wake up to the management's behavior of using their own rights to control expenses,through the establishment and effective implementation of post checks and balances to carry out internal control,inhibit the management of real earnings management behavior,prompting owners to ensure the effectiveness of the implementation of internal control,improve the company's internal control system.