The Motivation And Identification Of Financial Fraud In Chemical Industry

Financial fraud has emerged at the top of China’s stock market.From 1997 to2020,of the 285 listed companies in China’s chemical raw materials and chemical products manufacturing industry,a total of 93 enterprises had problems in financial information disclosure,of which 22 listed companies had inaccurate performance prediction and 15 clearly identified financial fraud.The frequent occurrence of financial fraud brought huge losses to stakeholders,Seriously endangering the establishment of a healthy,transparent and effective capital market.Therefore,the analysis of the motivation and identification of financial fraud is of great significance for information disclosure,corporate governance and even the construction of capital market.At the same time,it can also enrich the relevant theory and demonstration.This article takes the famous financial fraud of JZD company in the chemical industry as a typical case,analyzes the causes of its fraud,and identifies potential fraud factors.First,analyze the internal factors of fraud in JZD through the response to the fraud incident,and analyze the external factors of fraud in combination with the industry in which it is located,and clarify the fraud factors.The internal factors will lie in the corporate governance framework and the decrease in profitability.The industry environment and policy requirements,the unstable rise of upstream raw material prices,the reduction of downstream demand,and the strict policies;secondly,the GONE theory is used to analyze the causes of fraud in JZD.The causes of fraud are mainly lack of professional ethics,corporate governance structure,and internal There are defects in control and shareholding structure,delisting pressure and shareholder financing needs,insufficient penalties,and inadequate auditing agencies.Thirdly,analyze its fraud methods.The specific fraud method of JZD is to transfer funds from the company to related parties through fictitious trade.Back to the company’s extracorporeal capital circulation;then,conducted an in-depth analysis of JZD’s financial statements,summarized the identification methods,and found that JZD was suspected of fraud in 2018 from the perspective of gross profit rate.From the cash flow analysis,it was found that the behavior in 2016 was extremely abnormal.From C-The score model found that it was suspected of fraud in 2015.Compared with the three methods,it was determined that the C-score model had better recognition;finally,based on the above analysis,targeted recommendations were made.The industry analysis part of this paper can provide relevant reference for those who pay attention to the chemical industry.The case analysis part can provide the perspective and Governance Countermeasures for regulators to identify financial fraud,so as to eliminate the occurrence of relevant behaviors.