The Intermediary Effect Research Of Internal Control On The Relation Between Corporate Governance And Real Earnings Management

Accounting earnings are the core of corporate stakeholders’ attention.Real and reliable earnings information can help users make reasonable investment decisions and achieve effective allocation of capital market resources.However,in the background of the separation of the two powers of modern enterprises,real earnings management is widespread in domestic and foreign companies that have been exposed many times.How to effectively reduce the degree of real earnings management is an urgent problem to be solved in the theoretical and practical world.Research has shown that corporate governance structure has an important impact on real earnings management,and corporate governance structure is an integral part of the internal environment and plays an important role in influencing real earnings management,too.Therefore,this paper introduces the mediation effect mechanism to explore the intermediary effect of internal control on the relation between corporate governance and real earnings management.This paper takes the 2013-2017 Shanghai and Shenzhen A-shares manufacturing listed companies as samples,uses Factor analysis to construct the Corporate Governance Index(CGI),selects the internal control index published by Shenzhen Dibo Company to measure the effectiveness of the company’s internal control,and adopts the Roychowdhury model to measure the degree of real earnings management for the sample companies,and builds the corresponding regression model to test the mediating effect of internal control empirically.This research finds that:(1)For Shanghai and Shenzhen A-shares manufacturing listed companies,corporate governance level is significantly negatively correlated with real earnings management;(2)corporate governance level is significantly positively correlated with internal control effectiveness;(3)Internal control plays a mediating role between corporate governance and real earnings management,the effectiveness of internal control is negatively correlated with the degree of real earnings management.Further,this paper puts forward some suggestions from four aspects: improving corporate governance level,improving internal control effectiveness,coordinating the development of corporate governance and internal control system,and accelerating the transformation of real earnings management related scientific research results,in order toeffectively curb the real earnings management of pilot companies.Finally,it points out the weakness and the field of research in the future.