EARNINGS MANAGEMENT AND AUDITING: AN EMPIRICAL STUDY OF CHINESE COMPANIES

摘要

This study sheds light on how various audit aspects influence/reflect China publicly listed firms' earnings management using CCER 2008-2012 data. State controlled firms' audit aspects are not associated with their earnings management behavior. For other firms, higher audit fee indicate lower earnings management. We believe high audit fee lead to extensive audit and thus lower earnings management. Extensive audit compensate for the young legal and accounting system in private sector of China. For state controlled firms, more than twice as many are switching to Big Four auditors than switching away from Big Four auditors. We can expect Big Four expand their market share among state controlled firms if the trend continues.