| Summary: | 碩士 === 國立政治大學 === 會計研究所 === 101 === The objective of this thesis is to investigate whether there is a relationship between internal control and earnings management. In this thesis, I use two types of earnings management: accrual-based and real activities earnings management and I find that there is a significantly negative relationship between quality of internal control and earnings management. Specifically, my results show that high-quality internal control inhibits managers from earnings management through discretionary accruals, implying that high-quality internal control could lower the level of accruals-based earnings management. Moreover, I document that high-quality internal control could reduce upwards real earnings management through increase production, decrease influence through decreasing manipulation discretionary expenses and lessen level of abnormal cash flow. Collectively, I find that high-quality internal control can lower the level of real and accrual-based earnings management behaviors.
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