A Study on the Governance Effect of Disclosure of Key Audit Items on Earnings Management Behavior:Based on DID Modeland and Text Analysis
ZHU Zegang1, JIANG Lisha2
1. School of Accounting, Lanzhou University of Finance and Economics, LanZhou 730020, China; 2. School of Economics and Management, Northwestern University, Xi’An 710127, China
Abstract With the help of the new audit standards(No.1504), the authors designed a DID model and did a quasi-natural experiment to test the impact of the disclosure of key audit items on the earnings management behavior of listed companies.The study found that that the disclosure of key audit items has an obvious governance effect on the earnings management behaviors of listed companies, especially for non-state-owned enterprises and companies with a strong tendency of earnings management behavior with high financing demand.Further analysis shows that the more key audit items are disclosed, the more obvious the “shock and awe” effect on the management level is, and the more the level of earnings management decreases.Among them, the disclosure of key audit items in the revenue recognition category plays a most significant role in reducing the earnings management level of sample companies.The conclusion shows that the disclosure of key audit items improves the information quality of listed companies by restraining earnings management behavior, which is conducive to the improvement of capital market efficiency.
ZHU Zegang,JIANG Lisha. A Study on the Governance Effect of Disclosure of Key Audit Items on Earnings Management Behavior:Based on DID Modeland and Text Analysis. Economic Survey, 2021, 38(1): 0124.
2021, Vol. 38 
