| In the case of USA WorldCom, internal auditors got widespread concern because of its reveal of fraud. In recent years, our country’s regulators pay more and more attention to the role of internal audit in companies. Internal audit is of great significance to improve corporate governance, internal control system and competitiveness of company. The earnings management behavior of listed companies reduces the reliability of financial information, which can’t reflect the true level of company’s profitability. Therefore the interests of broad investors are at great risk.Since the Chinese economy has reformed and opened up, private companies develop rapidly and occupy an important position in our national economy. We should still pay attention to their governance problems when we see their improvement and development. Private listed companies are the pioneers of their fellows, it’s necessary for us to study the internal control problem of them.So, the paper collected and made statistics of the data about the internal audit level in Chinese private listed companies. Besides, I predicted the earning management level by using correlation and regression analysis. The research found that the disclosure of internal audit disciplines and the objectiveness of internal audit are all negatively related to earnings management. So we get to the conclusion that there is a negative relation between the level of internal audit and earnings management in private listed companies. |
