| Summary: | 碩士 === 東吳大學 === 會計學系 === 101 === This paper examines the relationship between earnings management and fraud, and adds the effect of audit in China. Because there are the same motive and methods manipulated in earnings management and fraud, this paper develops hypotheses that if companies have more earnings management, they would have more likelihood of fraud. Moreover, companies which are audited by nonbig 10 use more earnings management, they would have more likelihood of fraud due to badly audit quality. Empirical results show that companies have more earnings management which is lagged one year and average of three years, they would have more likelihood of fraud. Besides, companies which are audited by nonbig 10 use earnings management would easily lead to fraud. This paper also inspects the situation of state ownership, audit opinion and modified fraud sample in order to enhance our result. This paper is not only rich this type of research but also provides the standard of auditing for government and accounting firms to audit companies to decrease investment risk.
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