Empirical Study On Relationship Between Disclosure Of Internal Control Information And Real Earnings Management

The high quality of information disclosure of internal control could help to suppress corporate insiders (managers) manipulating financial reporting information disclosure false financial information, then carry out earnings management. With the accounting supervision has been strengthened, to carry out earnings management through traditional accounting fraud or manipulation of accruals ways has been restriction significantly. In order to meet the specific surplus needs, Managers of listed companies increasingly tend to use more subtle ways to manipulate the company’s earnings, that is the real earnings management activities.This article review and summarize domestic and international research on internal control information disclosure and real earnings management activities. Through statistical analysis, regression analysis and correlation studies to analysis China A-share listed real estate companies financial data from2010to2012;and analyzing the private enterprises and state-owned enterprises listed companies, summarize different internal control information disclosure generate different effects on earnings management oversight. We can find that China’s listed real estate companies increasing emphasis on internal controls, and the disclosure system of internal control self-assessment report has been relatively well, but the disclosure of internal control attestation report is still poor. It is negative correlation significantly between the disclosure of internal control self-assessment report and real activities degree of earnings management. This paper argues the reason is sample companies to disclose few internal control attestation report, external Certified Public Accountant provides verification report is not true and valid. In addition, whether it is state-owned or private listed real estate companies, compared with other samplest, internal control self-assessment report and attestation report produce the same effect on earnings management. Besides, the average real earnings management activities of state-owned enterprises listed on the real estate is much higher than private listed real estate companies, the reason is state-owned enterprises managers have no residual claim, then may generate problems of internal control easily, management is easier to make decision in favor of their own interests and harm the interests of the shareholders, in turn increase the listed company’s real degree of earnings management activities. Finally, puts forward policy proposals and related measures to perfect capital market information disclosure of internal control.