Deviant Strategy、Quality Of Internal Control And Earnings Management

At present,China’s economy is in the transformation stage of speed-up shifting,structural adjustment,and kinetic energy conversion.In order to cope with the opportunities and challenges of economic transformation and maintain a leading position in the increasingly fierce market competition,some companies choose to develop a strategy that deviated from the industry average,that is,a strategic difference between enterprises.Frequent financial violations in the capital market in recent years have pushed earnings management into a boom in research.Earnings management has been concerned by the theoretical and practical circles for a long time.Deviant strategy lead to aggravation of the enterprise’s operating risk and information risk,thus provide opportunities and manipulation space for the management to conduct earnings management.Based on this,the purpose of this article is to study the influence mechanism of deviant strategy on earnings management.The COSO "Enterprise Risk Management Framework" and China’s "Basic Standards of Enterprise Internal Control" both point out that internal control plays an important role in controlling the risk of strategy formulation and ensuring the implementation of the strategy.So,whether internal control will be adjusted in deviant strategy and earnings management,the role of controlling adverse effects is another focus of this paper.Firstly,this article reviews relevant literature on deviant strategy and earnings management.Secondly,this article analyzes the impact of deviant strategy on earnings management and analyze the adjustment mechanism of the quality of internal control in the influence of deviant strategy on earnings management by combining strategic management theory,principal-agent theory,information asymmetry theory,and internal control five-element theory.Third,this paper selects the data of Chinese A-share listed companies from 2014 to 2018,and makes descriptive,correlation analysis and univariate analysis.In addition,the regression model is constructed according to the corresponding research hypothesis.And further this paper makes regression analysis on state-owned and non-state-owned samples.Finally,the conclusions of this paper are drawn based on the regression results,and corresponding suggestions are put forward accordingly.At the same time,the deficiencies in the research and the future outlook are pointed out.The results show that the deviant strategy has a negative inhibitory effect on the earnings management,and high internal control quality can alleviate the negative inhibitory effect of deviant strategy on earnings management.The results grouped by property show that earnings management behaviors are common among state-owned and non-state-owned enterprises with large strategic differences,and the quality of internal control has a more significant role in regulating the relationship between deviant strategy and earnings management.The innovation of this article is to quantitatively examine the relationship between deviant strategy and earnings management from the perspective of strategic differences,and scope of the factors affecting the earnings management and the economic consequences of deviant strategy has been broadened.At the same time,introducing the quality of internal control creatively into the research framework of deviant strategy and earnings management,and empirically testing the role of high internal control quality in controlling the strategy formulation and implementation process of enterprises and promoting the achievement of strategic goals.Besides,the research conclusions of this article helps management to select development strategies carefully,give full play to the role of internal control quality in strategy formulation and implementation,improve the effectiveness of strategic differences,thereby improving the quality of earnings and enhance the protection of external stakeholders.