Study On The Relationship Between Audit Quality And IPO Corporate Earnings Management

Under the approval system,whether the enterprise can be listed must be approved by the securities regulatory body,in which the past business performance is a very important factor to consider."Company law","Securities law","the regulations on the administration of initial public offering and listing" provide for certain conditions that a company must meet in its initial public offering(IPO),for example,the administration of initial public offering and listing provides that the company's net profit in the last 3 fiscal years shall be positive and accumulate more than RMB 30 million.Therefore,in order to qualify for the listing,the company has incentives for earnings management,especially for companies with poor performance,and the incentive to go public through earnings management is more intense.In addition,our IPO company's issue price depends on the company's performance,the IPO company's performance is good,the general issue price is also high,the issue price is high,the company raises the fund also more.Therefore,the IPO company in order to raise the issue price has through the surplus management falsely increases the surplus the motive.However,prior to the initial public offering,the IPO company must disclose the annual financial report publicly,the annual financial report compiled by the internal management,and the external auditor of the CPA firm hired by the IPO company to disclose it.Therefore,the audit quality of the CPA firms hired by IPO companies determines the degree of restraining the earnings management behavior of IPO companies.With the extensive implementation of the earnings management activities by the IPO companies,the academia studies the earnings management behavior of IPO companies,and researches on the relationship between audit quality and accrual profit management of IPO companies.There are few studies on the two methods of earnings management for the IPO company's real earnings management and accrual profit management.In this paper,make the first public offering stock in China's securities market as a sample,from the theoretical and empirical research of high quality audit and IPO company accrual profit management and real earnings management relationship.Based on the review of domestic and foreign research status,this paper expounds the basic theories of audit quality,the concept of IPO company's earnings management and the means of IPO company's earnings management,and analyzes the motives and ways of IPO company's earnings management by contract theory,principal-agent theory and asymmetric information theory.Then it analyzes the relationship between audit quality and earnings management of IPO company with the theory of audit supervision,puts forward the theory hypothesis,and examines the hypothesis of theoretical analysis based on the sample of the first public offering of stock in our country.Through theoretical and empirical analysis,the conclusions are as follows:(1)The larger the scale of CPA firms hired by IPOs companies,the lower the management degree of accrual earning of IPO companies,but no significant influence on the real earnings management of IPO companies;(2)The higher the profession professionalism of the auditor employed by the IPO company,IPO company accrual earning management degree is lower,but has no obvious influence to IPO company's real earnings management degree.In view of the above conclusions,this paper gives lots of relevant recommendations,the related departments should further improve the accounting standards to reduce the space of IPO company surplus management,at the same time,auditors of accounting firms need to constantly strengthen their own skills to improve audit quality.There are six parts in this paper.The first part is the introduction,elaborated our country earnings management activity universality fact,thus proposed this article research background,the research mentality as well as this thesis frame.The second part reviews the motivation of IPO company's earnings management in our country and abroad,sums up the literature of accrual earning management,real earnings management relationship,audit quality and earnings management.The third part introduces the theory of audit quality and earnings management of IPO company.This paper mainly expounds the concept and type of earnings management,and analyzes the motivation of IPO company to carry out earnings management by contract theory,principal-agent theory and asymmetric information theory.Part IV analyzes the relationship between audit quality and earnings management degree of IPO company,this paper explains theoretically how audit quality influences IPO company accrual earning management,and why it does not help to restrain real earnings management,and puts forward two hypotheses: Assumption 1,when the IPO company hires the accounting firm for Big4,the more can restrain the IPO company accrual earning management degree,but does not help to restrain the IPO company real earnings management degree;Assuming 2,the greater the professionalism of the auditor employed by the IPO company,the greater the ability to restrain the accrual earning management of the IPO company,But it does not help to curb the extent of the IPO company's real earnings management.Part five is empirical analysis.In this paper,the initial public offering of stock companies as an example of its species,using descriptive statistics,regression analysis and other methods to test the hypothesis of theoretical analysis,test the audit quality and IPO company earnings management degree of relevance.The sixth part summarizes the research of the full text and draws the conclusions of this paper,and proposes related policy recommendations based on the conclusions of the study.At the same time,the deficiencies of this study are also indicated at the end of this paper.The main contributions of this paper are as follows: There are a lot of literatures on the relationship between audit quality and earnings management of IPO company,but these literatures mainly focus on the inhibition of the profit management degree of audit quality,but there is little literature on the effect of audit quality on real earnings management.This article through examines the audit quality to the IPO company accrual earning management and the real earnings management two kinds of earnings management way restraining,it can avoid the deficiency of accrual management research,and better reveal the effect of audit quality on IPO company's earnings management,and also contribute to the perfection of IPO system and accounting standard.