The Impact Of Internal Control Defects And Rectification On Earnings Persistence

Internal control is an important foundation for the standardized operation of an enterprise.It runs through various businesses and processes of production,operation and management of an enterprise,plays an important role in controlling risks and reducing losses,so it has an important impact on earnings persistence.Since 2008,with the promulgation of the basic norms of enterprise internal control,internal control has become a window for information users to learn the business risks of enterprises.As for earnings persistence,it is of great significance to the decision-making of information users as an important aspect of evaluating earnings quality and becomes a focus of stakeholders.This paper studies the impact of internal control defects and rectification on earnings persistence,which has certain research value and practical significance for strengthening the construction of enterprise internal control and improving earnings persistence.This paper takes WANNIANQING as a case,and deeply analyzes the impact of internal control defects and rectification on earnings persistence based on the data before and after WANNIANQING was issued negative opinions on internal control and completed the rectification.Firstly,the paper reviews the relevant literature research at home and abroad,and takes the principal-agent theory,internal control theory,stakeholder theory and signal transmission theory as the research basis.Secondly,it introduces the internal control defects and rectification of WANNIANQING,analyzes the earnings persistence of it through the data of the three stages of before,during and after the internal control defects and rectification,and finds that perfect internal control is an important guarantee for the earnings persistence of enterprises.Major defects in internal control will reduce the earnings persistence,while effective rectification can improve it.Thirdly,based on the perspective of accounting profit,cash flow,operating efficiency and operating effect,this paper studies and analyzes the impact path of internal control defects and rectification on earnings persistence.Finally,according to the research conclusions,this paper puts forward relevant suggestions from three aspects of internal control design,operation and maintenance,hoping to provide reference for Chinese enterprises to improve their own earnings persistence from the perspective of strengthening internal control construction.