Internal Control?Customer Relationship Transaction And Real Earnings Management

On the one hand,relationship transaction has been accepted by more and more companies for its role in reducing transaction costs,controlling financial risks and improving enterprise performance;On the other hand,relationship transaction depresses the transparency of information disclosed by enterprises,thus opening the way for opportunism as well as moral hazard,and producing a negative impact on corporate governance.With the improvement of foreign research,relationship transaction has been widely concerned by domestic academe in recent years.Cultural distinctions lead to different understandings of relationship transaction both at home and abroad: foreign companies establish cooperative relationships in full accordance with certain commercial purposes,which paying less attention to human relations between companies;domestic companies pay much more attention to the private emotional communications between cooperative enterprises instead.The unique cultural and economic environment in our country brings up a particular relationship transaction with Chinese characteristics,which makes the related research based on the domestic listed companies have its unique theoretical and practical significance.With the increase of relationship transaction,companies are increasingly dependent on the stakeholders.In order to keep these transaction relationships,companies make great efforts to create a fine figure of their own sound development,and often choose earnings management to transfer good information to the outside world.In the 2008 study,Raman pointed out that enterprise earnings management in the context of supply / customer relationship transaction may play two different roles.On the one hand,enterprises convey information to the outside world that the future cash flow is sufficient by smoothing earnings,thus helping suppliers and customers enhance their confidence in profit in investment and reducing the risk of investment assessment;on the other hand,through earnings management,enterprises cover up the real information of earnings volatility,hide potential risks of enterprises,and beautify relevant earnings data,thus triggering opportunistic behavior.In order to suppress the earnings management behavior of opportunistic motivation,internal control is introduced into the enterprise as an internal governance mechanism.Studies have shown that,internal control promotes earnings quality and plays an important role in reducing opportunistic behavior,preventing financial fraud and restraining earnings manipulation,but these studies are mainly based on the view of accrued earnings.Compared with accrued earnings management,real earnings management owns greater operating space and brings more serious negative impacts on the long-term development of the company,but the related research is still not enough.We introduce internal control on the basis of the study of the relationship between real earnings management and relationship transaction,aiming at exploring the effect of internal control on the relationship between the above two.In consideration of the serious absence of supplier information in the annual report of the listed company,this paper selects the customer relationship transaction as a breakthrough point.First of all,the relevant literatures are collected and listed both at home and abroad.Next,analyze the research contents according to the theory and put forward the hypothesis.Finally,establish models for empirical research and analysis.The main conclusions of the paper are as follows:(1)The higher customer relationship transaction,the more serious the real earnings management behavior of the company.(2)The worse the internal control,the more serious the real earnings management behavior.(3)High quality internal control can effectively suppress the real earnings management behavior caused by customer relationship transaction.At last,this paper puts forward relevant policy recommendations based on the results of the study:(1)Improve the internal control system and strengthen the effective implementation of the system.(2)Standardize the relationship information disclosure system and strengthen the governance role of information in relational transactions.(3)Strengthen the legal system and improve the market mechanism.