The Research On The Relations Between Internal Control Effectiveness And Earning Management

With five ministries jointly issued the enterprise internal control basic rules "(2008) and" the enterprise internal control supporting guide "(2010), mark set up in China with Chinese characteristics" application+evaluation+audit "three close contact system of internal control system. And in the listed company’s internal control in the practice of the result of the internal control system design and operation to realize the aim of internal control whether to provide reasonable assurance that further research is needed. Research shows that our listed company earnings management problems are common. Surplus information is an important component of the financial report, the quality of the surplus information from one side of the financial report reflects the quality. One of the goals of the internal control is to ensure the reliability of the financial report. Therefore, this article from the effectiveness of internal control can influence of surplus information and how to produce the effect of perspective for the effective internal control whether can inhibit management earnings management. This is the problem of earnings management study Angle of a kind of development.Based on the theoretical analysis and the way of the combination of the empirical analysis, this paper discusses the internal control effectiveness of the listed companies in China to managers and earnings management accounting choose real activities the influence of earnings management. This article through the domestic and international management internal control and earnings management related literature review, to understand the status quo. And according to the incomplete contract theory and principal-agent theory of internal control effectiveness and earnings management theory analysis, and puts forward the research hypotheses.The empirical analysis on the author selecting2011Shanghai a-share listed companies as A sample. As accounting surplus management of choice and real earnings management activities for be explained variables, based on internal control and the internal control effectiveness goal is to build a comprehensive evaluation index extracting principal component building internal control effectiveness index as explained variables, using SPSS.17.0for OLS regression analysis found that, the effective internal control can restrain the company accounting choices and real activities of earnings management, improve the surplus information quality. Based on liquidity adjustment plan should be performance model was handling accrued surplus of earnings management agency as variable robustness test. The obtained result and regression analysis is consistent, show that the results with the return of conservatism.The innovation of this paper is to earnings management method based on earnings management will be further divided into accounting choice of earnings management and real activities of earnings management. The author used for reference Roychowdhury (2006),Cohen et al.(2010) of the study calculated, manipulating operating cash flow, manipulating the production cost and playability deliberate expenses, so that the company’s sales control measure, production control and manipulation of discretionary expenditure of earnings management behavior. Also with internal control target as the breakthrough point build internal control effectiveness comprehensive evaluation system of the listed company’s internal control effectiveness study.