Research On The Relationship Between Internal Control Quality And Earnings Management Under Media Attention

The manufacturing industry plays an important role in promoting the growth of the national economy."Made in China 2025" pointed out that China will need to complete the transformation from great manufacturing nation to powerful manufacturing nation by 2025.However,there are many problems in this process.For example,there is a widespread problem of earnings management in China's manufacturing industry,which seriously affects the reliability of earnings information disclosed by manufacturing enterprises,misleads information users to make wrong decisions,and hinders the normal development of the manufacturing industry.Earnings management can be realized not only by selecting accounting policies,estimates and methods,but also by constructing some real trading activities.Different earnings manipulations have different characteristics,and managers can choose them according to the overall situation of their own companies.Therefore,most listed manufacturing companies in China will conduct earnings manipulations.There are many factors affecting earnings management,among which the most important one is internal control.At present,many domestic and foreign scholars have found that high-quality internal control plays an important role in restraining earnings management behavior.In addition,as the core of the real economy,with the rise of social media such as microblog,We Chat and forum,the media governance mechanism of listed companies in the manufacturing industry has also received increasing attention.Therefore,based on listed manufacturing companies,this paper studies the relationship between internal control quality and earnings management,and analyzes the moderating effects of media attention on both,as well as the differences between the moderating effects of traditional media and social media.In order to provide useful reference for the improvement of internal and external governance mechanism of listed manufacturing companies in China,so as to reduce the phenomenon of financial fraud and promote the long-term development of enterprises.This study takes A-share manufacturing listed companies in Shenzhen Stock Exchange from 2013 to 2018 as samples,and collects relevant data based on CSMAR,CFND and CSMD.Based on stakeholder theory,principal-agent theory,information asymmetry theory and media governance mechanism,the internal control index released by Dibo Company is selected to measure the quality of internal control and analyze its relationship with earnings management.At the same time,this paper explores the moderating effect of media attention on the relationship between internal control and earnings management,and makes empirical test and analysis by using multiple linear regression model.The results of this paper show that the quality of internal control of listed manufacturing companies is significantly negatively correlated with accrual and real earnings management,and the existence of media attention weakens the inhibitory effect of internal control quality on earnings management,especially the moderating effect of social media attention.Finally,in response to the conclusions drawn by the study,this article puts forward corresponding countermeasures and suggestions from the aspects of internal control and media governance:(1)The relevant punishment system and accounting standards for listed companies in the manufacturing industry should be improved;(2)Establish and improve the internal control system of manufacturing listed companies to ensure effective implementation;(3)Optimize the media governance mechanism of listed companies in the manufacturing industry.So as to provide reference for promoting the improvement of internal and external governance mechanism of listed manufacturing companies in China and reducing the earnings management degree of listed manufacturing companies in China.