The Relevance of Audit Quality, Debt Financing and Earnings Management

Abstract

The relevance of audit quality, DF, and EM is a topic of common concern at home and abroad. The research first analyzes the DF mode, EM motivation, and financial audit mechanism. Then the modified Jones model is applied to EM. Two regression models are constructed by introducing control variables and adjustment variables. According to the empirical results of 11835 observed sample values, there are differences in the degree of earnings management among A-share companies. The average accrued profit is 0.063, the maximum value is 3.960, the minimum value is 0, and the standard deviation is 0.091. The situation of different listed companies getting debt financing increments varies greatly, with an average value of 0.095 and a standard deviation of 0.214. The average asset-liability ratio is 0.429, and the average enterprise size is 22.215. Correlation analysis shows that there is a positive correlation between bank loan increment, total debt increment, commercial credit increment, and earnings management behavior, while there is a negative correlation between audit quality and earnings management. The regression analysis results show that there is a positive relationship between the total increase in corporate debt, the increase in commercial credit, the increase in bank loans, and the degree of earnings management, while there is a negative correlation between audit quality and the degree of earnings management.