Under Different Audit Quality:An Empirical Study Of Relationship Between Fair Value And Earnings Management

With our country's economic globalization and the gradual improvement of the capital market,the historical cost measurement model can no longer meet the current economic situation.The fair value measurement attribute has become the general trend.Under the background of convergence with international accounting standards,the Ministry of Finance of China issued as many as 17 specific standards for fair value in the specific corporate accounting standards in 2006.Although fair value can improve the relevance of accounting information,it has not been disclosed in detail in the notes to the report and also expands the space for managers to carry out earnings manipulation to a certain extent.Because of its more complicated valuation process,many scholars remain skeptical to the application of fair value.As an important external supervision mechanism,audit quality directly determines whether a listed company can truly pass on its operations to outside investors,creditors,and other stakeholders.The auditors are more capable to suppress the audit client's earnings management behavior,thereby ensuring the authenticity and fairness of the financial statement data,if they own higher level of professional knowledge and independence.High audit quality can also improve the transparency of accounting information.Therefore,it is of great significance to discuss the impact of fair value on earnings management under different audit qualities.Based on the information asymmetry theory,contract theory and principal-agent theory,this paper analyzes the methods of earnings management of listed companies under the fair value measurement model.It also explores whether there are differences in the degree of earnings management of listed companies and the means of using fair value for earnings management,under different audit qualities.Selecting 2013-2017 A-share listed companies as the research sample and using STATA analysis software for empirical analysis,it is found that the relationship between the earnings management and the change in profit and loss of fair value is not significant.Listed companies will manage earnings through investment income,non-operating income,and asset impairment losses.The improvement of audit quality can restrain the degree of enterprise earnings management.Listed companies with high audit quality tend to use investment income and non-operating income to control earnings,and the use of asset impairment losses for earnings management will be suppressed.Listed companies with low audit quality has not effectively controlled the use of asset impairment losses for earnings management,still tending to use investment income,non-operating income and asset impairment losses to manipulate earnings.Finally,comprehensively considering the previous theoretical research and empirical analysis,the relevant suggestions are put forward.