Financial Fraud Case Analysis Of Eastern Gold Jade Based On Crime Five Factors Theory

With the rapid development of the economy,the number of listed companies in China is gradually increasing,but at the same time,the quality of listed companies needs to be improved,such as the repeated prohibition of financial fraud.In recent years,cases of financial fraud by listed companies have abounded,spanning various industry sectors,which not only discouraged investors,but also had an impact on the establishment of a capital market integrity system.Practice has proved that if we only pay attention to the speed of development and ignore the quality of development,it is not conducive to the sustainable development of the capital market.Therefore,how to balance the development speed and development quality,alleviate the contradiction between the demand for rapid development and the frequent occurrence of financial fraud is the issue that we should focus on at present.By applying a sound theory of financial fraud,identifying the diversified fraud means and fraud motivations of listed companies,and putting forward effective suggestions based on this can alleviate the above contradictions.In the above context,by reviewing the existing research theories of financial fraud,the CRIME theory(i.e.,crime theory)was finally selected as the cornerstone theory of the case analysis of this thesis,and Eastern Gold Jade Co.,Ltd.,which was "the first share of compulsory delisting in 2021",was selected as the case study object.As the first listed jadeite company in China,its degree of attention is self-evident,and it also lived up to expectations,and in the period after the listing,it made brilliant achievements in the main business income,so it once became the "darling" of the capital market at that time.However,in 2020,Eastern Gold Jade has long ceased to be glorious,the equity of listed companies held by controlling shareholders has been frozen in turn,the company’s assets have been auctioned,and the lawsuits that have been overwhelmed show that the debt crisis of Eastern Gold Jade has continued,and the former "gambling stone" king has quietly ended.This thesis has five chapters,the main contents are as follows: the first chapter is the introduction,mainly summarizing the research background and significance of this thesis,and by combing the relevant literature,summarizing the research ideas and methods,the basic framework of this thesis is established;the second chapter is a theoretical overview of financial fraud,including the theory and concept of financial fraud,some common fraud means and motives,and introduces the CRIME theory in more detail,providing a theoretical basis for subsequent case analysis;the third chapter is a description of the case of Eastern Gold Jade fraud.Including the basic situation of the company and the review and investigation of financial fraud incidents,it introduces the questioning incident of Eastern Gold Jade,the investigation process and the punishment results of the regulatory authorities in the case;the fourth chapter is based on the CRIME theory of Eastern Gold Jade financial fraud analysis,from the financial fraud of Financial Fraud Cooks(C),Recipes(R),Incentive(I),Regulatory Mechanism(M),and End Result(E)of Eastern Gold Jade financial fraud behavior is specifically analyzed.From the analysis of the financial frauder dimension,the company’s management has low integrity and morality,the legal awareness is relatively weak,in order to quickly revitalize the Eastern Gold Jade,breeding greed psychology;from the secret dimension analysis,the Eastern Gold Jade mainly has fictitious operating income and costs,the construction of its own capital circulation transactions and the use of the particularity of inventory for financial fraud;from the incentive dimension analysis,financial fraud can meet financing needs,maintain the company’s industry status and avoid delisting crisis,and the cost of fraud is low,Various factors motivate companies to engage in fraudulent practices.From the perspective of regulatory mechanism,there are mainly defects in the corporate governance structure,which are manifested in the fact that the actual controller is "dominant",the two functions of the corporate governance and the manager are integrated,the effectiveness of the company’s internal control supervision is low and the implementation of control activities is insufficient,and there are problems such as dereliction of duty by external audit institutions.From the analysis of the end result dimension,the fraud behavior of Eastern Gold Jade has caused the company to face administrative penalties and civil lawsuits,and the stock price and market value have plummeted,resulting in the industry giant "Jade First Shares" being finally forcibly delisted,and also suffering huge losses to small and medium-sized investors,creditors,local governments and even the capital market.The fifth chapter is the conclusion and enlightenment of the study of the financial fraud case of Eastern Gold Jade.Therefore,this thesis suggests that listed companies should strengthen the construction of professional ethics,improve the governance structure and strengthen the internal control of the company,and the external can strengthen the effectiveness of external supervision by establishing a "three-in-one" supervision system,while improving laws and regulations and increasing the cost of fraud.In addition,big data technology can be used to identify hidden related parties and improve regulatory efficiency.