A Case Study On The Relationship Between Internal Control Information Disclosure And Earnings Management

January 1,2012, the "Guidelines for Enterprise Internal Control" formally implemented in Shanghai and Shenzhen Stock Exchange. This series of guidelines mandated listed companies to disclose information on the internal control and publish the audit report issued by certified public accountants. Can this series of guidelines for the implementation of China’s listed companies can enhance the quality of information disclosure of internal control, improve internal control system, enhancing reliability of financial reporting, and inhibition of earnings management behavior? In this paper, the relationship between internal control information disclosure of listed companies and the earnings management, and the results of implement for "Enterprise Internal Control Guidelines" were studied.First, this paper lists the background and significance of research, research content and methods, the framework and main innovative points of the article. It also reviews research status at home and abroad, and analyzes the theoretical foundation of the relationship between internal control information disclosure and earring management.Secondly, we collected Shanghai-listed Company’s internal control reports and internal control audit reports in the year of 2010-2012, carried out descriptive statistical analysis. This article also compiled Shanghai-listed company’s ROE in the year of 1996-2012, and drawn ROE histogram for each year, revealing the widespread phenomenon of earnings manipulation in listed companies. Manipulated accruals of listed companies were measured by the modified Jones model, revealing the negative correlation between the internal control information disclosure and earnings management. This article also grouped the sample based on earnings managemen direction, confirming earnings management in different directions, the internal control disclosure of information has different relationship with earnings management.In addition, we find the relationship between Shanghai-listed company’s earnings management and internal control quality of information disclosure is not significant at the year of mandatory disclosure of information about the internal control system is implemented. Mandatory disclosure of internal control information system implementation effect needs further examination. In this paper, based on the conclusions and China’s actual situation, put forward our information disclosure and internal control deficiencies in the audit firm, and make a few suggestions as reference to the relevant departments.