The Comparative Study Of Pre-warning Models’ Effect Of Financial Fraud In Kangdexin

With the thirty-years development of Chinese stock market,not only the market size but also institutinal improvement has made achievement,more and more companies chose to come into the market to financing.Listed companies with complete management structure are not only the basis of stock market but also the guarantee of attrcting investers.However,there are quality problems of management in our listed companies,for example the uncomplete internal controls,poor information disclosure quality,overstating relevant business to mislead investores etc.These phenomena disturb the social order,harm investors’ interest and trust to the stock market and supervision department.In order to assess the financial risk of listed companies,scholars chose different indexs such as quick ratio and debt protection ratio to establish a set of financial pre-warning models,which aim at helping investors analyze portfolio investment value,judge investment risk,and are also significative to the development of stock market.In the past decade,88 listed companies have been disclosed to have financial fraud.In 2019,the CSRC reported the financial fraud case of kangdexin company,which was also the "largest amount fraud case of a share" in that year.During 2015-2018,the company falsely increased its total profit by fictitious sales business and other means to 11.9 billion,causing huge losses to investors.Taking the company as a case study,this paper analyzes the financial statement data published in the fraud period,and finds that there are anomalies in its monetary capital,inventory,gross margin,free cash flow and other aspects,mainly using such fraudulent means as fictitious procurement,fictitious increase of operating costs,related transactions,large shareholders’ embezzlement of funds.Although the incident occurred in 2019,in fact,the company’s abnormal financial situation can be detected in advance by using the financial pre-warning model.This paper selects Z-score model and Y-score model which are widely used to test the financial data of kangdexin company in recent 8 years.The results show that in the data test of 2015-2018,the two models are gray in financial status,which is consistent with the financial status published by the CSRC.However,from the data inspection results of 2011-2014,the inspection results of Y-score model from 2011-2013 are financial status security,the inspection results of 2014 are financial status gray,and the inspection results of Z-score model are financial status gray,which is inconsistent with the actual situation.The research results of the financial fraud case of kangdexin company show that it is effective to use the financial pre-warning model to evaluate the financial risks of listed companies,and we can use the ideas and methods of the financial pre-warning model.The comparative analysis of the model shows that the evaluation effect of Z-score model is not good,and the preferred stock and common stock market value / total debt index selected are not easy to obtain in the financial statements of Chinese listed companies,and Y-score model is more suitable for Chinese stock market.In addition,the paper puts forward some preventive measures and suggestions for the current accounting industry in terms of weak supervision and imperfect laws and regulations.