Based on the agency theory of audit demand, this paper studies the relationship between GCO and earnings management under the effect of differentiated market environment. Study finds that GCO can lead to management using accrued profits and real activities for earnings management. Compared with state-owned enterprises, non-state-owned enterprises are better at using real activities with high concealment for earnings management. The occurrence of M & A events will weaken the earnings management behavior under GCO. When receiving GCO for the first time, the management tends to use the manipulation of accrued profit to carry out earnings management. With the increase of the number of times when GCO is issued, the management turns to the real activities with high concealment to carry out earnings management. The more transparent the market environment and the higher the degree of marketization, the more likely it is to suppress earnings management under GCO.