Research On The Relationship Between Quality Of Internal Control And Earnings Quality

Based on the present study,this paper considering earnings persistence and earningsconservatism affect by the quality of internal control,we hope this paper will provide anew way of thinking for studying these issues.First, this paper define the concept of internal control,earnings persistence andearnings conservatism,and determine the measurement of both.Based on the enterprisecontract theory, accounting theory and agency theory,this paper discussed effective internalcontrol can compensate for the incompleteness of the contract, the agent who reduceagency costs, and the internal control objectives and earnings quality attributes therequirement is to improve the decision usefulness of financial reporting. This provides botha strong theoretical support for empirical research later correlation.Second,this paper uses the internal control index research by the Professor ChenHanwen of Xiamen Universityon.Professor Chen Hanwen reference to the COSO report,"Enterprise Internal Control Basic Standard" and "Enterprise Internal Control Guidelines",and in the framework of the five elements of internal control,Professor Chen Hanwenbuilding a five-level indicators,24secondary indicators,43three indicators and144fourindicators. These indicators were scored and multiplied by the weight of each indicator toobtain an internal control index.This paper selects earnings persistence and earningsconservatism to study the quality of earnings.Finally, after summarizing the research and results of the article. And this paper onhow to establish an effective internal control system and improve the quality of internalcontrol makes some policy recommendations. Meanwhile, regulators need to unify theevaluation standards of internal control.This paper merges the specification of internal control self-assessment report.Finally,Meanwhile,the business owners need to pay moreattention to the internal control and all aspects of the internal control system.