Earnings Management,Audit Fee And Non-Standard Audit Opinions

The behavior of earnings manipulation of listed companies is common and the motivation of earnings manipulation is varied.In order to maintain a good corporate image and excellent operating performance in the market or to obtain more remuneration,the management will choose earnings management.In addition,based on the purpose of listing and allotment of shares,the company will choose earnings management in order to meet the corresponding indicators.Also there are some companies,which make tax planning through earnings management in order to reduce the tax burden.Due to information asymmetry theory and principal-agent theory,the behavior of earnings management of listed companies can not be noticed by investors and regulators.In order to protect the interests of investors,we need effective auditing to monitor the financial reports of enterprises,and then to enable stakeholders to understand the financial status of the enterprise through the audit opinions issued.However,in recent years,the purchase of audit opinions occurs from time to time.Although the enterprise can change the audit opinion through the change of accounting firm,the regulatory authorities have strict rules on the replacement of accounting firms and the cost of replacing the firm is also high.So the company will instead choose another easy way like paying higher audit fees to shop audit opinions.Based on the above analysis,we raise the following questions in this paper: firstly,whether the audit opinions can reflect the earnings management of enterprises;secondly,whether enterprises can purchase audit opinion through audit fees,that is,whether the audit fees will affect the relationship between earnings management and audit opinion.In Empirical research,we use the panel data of A-share listed companies in Shanghaiand Shenzhen stock markets from 2012 to 2016,introduce the moderating variables of audit fees,and discuss its impact on the relationship between earnings management and audit opinion.Through empirical analysis,we get the following conclusions: firstly,there is a significant positive correlation between the earnings management and non-standard audit opinion,it means,the greater the degree of corporate earnings management of corporate,the higher the probability of getting non-standard audit opinions.Secondly,the audit fee as a moderating variable,led a significant reduction in the impact of earnings management on the impact of non-standard audit opinion.That is,there exists audit opinion shopping through paying higher audit fees.Furthermore,according to the samples which are grouped according to the size of the accounting firm,we find that opinion shopping is less likely to happen if the accounting firm is top ten accounting firm in China.Earnings management of listed companies has always been a hot academic research.Many Chinese and foreign researchers have considered the problem of earnings management,audit opinions and audit fee.However,most of the articles focused on the relationship between any two of these three variables,the research of the relationship among these three variables is relatively rare.Through the research in this paper,we hope to further enrich the research on earnings management,audit fee and audit opinions,and provide some references for the research of related topics in the future.The innovation of this paper is mainly to study the regulatory role of audit fee as a moderating variable between earnings management and non-standard audit opinion in different accounting firms.