The Role Of Auditor Specialization And Media Attention In Inhibiting Earnings Management

By the development of the information technology,the media has gradually developed to a kind of important forces to protect the justice.According to the ‘Forth Power' theory,media is gradually becoming the forth biggest political forces,which plays an important role in the capital market.As a significant means of supervision,audit has been the main forces to supervise the listed companies.However,the quality of audit has large difference.On the one hand,accounting firms will strive to improve the quality of audit by recruiting and training;on the other hand,the market will also seek the alternative forces to improving supervision.The financial media has disclosed the scandal of the listed companies,which has won the recognition of the investors.In the special background,it is significant to explore the influence of the media attention and audit behavior on the earnings management.Firstly,this paper reviews the past research about the auditor specialization,media attention and the earnings management,which helps us gain the aim of this study.Then we make a theoretical analysis about the relationship among auditor specialization,media attention and the earnings management and gain three research hypotheses of this paper.Secondly,we make empirical tests on these hypothesis.Then we establish an econometric model to test the hypothesis.We use the 9655 samples of Chinese Shanghai and Shenzhen A-shares of listed companies from 2011 to 2015.The results show that:(1)auditor specialization is negatively related to both accrual earnings management and real earnings management,which shows that audit behavior can restrain the earnings management behavior.(2)Media attention is negatively related to both accrual earnings management and real earnings management.(3)As to the accrual earnings management,we find an existence of substitution effect between the media attention and auditor specialization.However,as to the real earnings management,there is no substitution effect between the media attention and auditor specialization.The main contribution of this paper is to exploring the substitution effect between the media attention and auditor specialization in restraining the earnings management.Also,we explain the differences between the research results by studying the difference of the media and audit behavior.