| Fraudulent financial reporting floods the capital market all over the world. Even in the United States, whose institution was regarded as the best over the world, the recent flood of fraudulent financial reporting greatly damaged the macroeconomics and investors' confidence. The congress of the United States issued the Sabanes-Oxley Act of 2002 to protect investors by improving the accuracy and reliability of corporate disclosures. In China, fraudulent financial reporting is even more pervasive, which causes the loss of investors and injures the efficiency of capital market. In order to deal with the problem, it is crucial to improve related laws and strengthen punishment of misrepresentation. The dissertation systematically explores and analyzes the legal liability for misrepresentation in financial reporting and the current situation in China, at the end of this dissertation, the author puts forward some suggestions to improve related laws to decrease the fraudulent financial reporting.This dissertation consists of six parts:Introduction. In this part, the background, incentive, structure, delimitation, and limitation of this dissertation are described.Chapter One Definitions. This chapter gives some key definitions, including financial reporting, legal liability and it's three types of forms. Then the defining of fraudulent financial reporting is discussed. The author indicates that accountants and jurisprudents take different points of views on what is false financial reporting. The accounting industry takes procedure rationality opinion, under which the false reporting is judged according to whether it is prepared in correspondent with GAAP. However, legists adopt the rationality of outcome, they believe that any reporting not correspondent to the facts is false. Though the difference exists between these two kinds of rationality, they can be reconciled by improving the procedure. In the west, such as the US, compliance with GAAP is not enough to avoid lawsuits. The author argues that the legal authority of accounting standards and other related rules should be exactly recognized, that is, accounting standards and other rules should be regarded as the most important basis to determine false financial reporting. For, procedure rationality is the realistic choice of accounting. At the same time, the quality of accounting standards should be improved to ensure the procedural truth to approach the substantive truth.Chapter Two The rise of legal liability for misrepresentation in financialreporting. Legal duty is the premise of legal liability. Providing true and fair financial reporting is a part of accountability of the board of directors and management. Correspondingly, getting true accounting information is the right of shareholders. If the providers of accounting information (directors and management, etc) provide financial reporting with misrepresentation which causes losses of investors, they should pay for their wrongdoings, that is, they should take on legal liabilities.Chapter Three The defendant. This chapter analyzes who should be responsible for fraudulent financial reporting. The existing literature is only limited to the citation of related rule, and therefore lacks of theoretical analysis. This chapter intends to fill the gap. Fiduciary duty is the basis of the verdict. Listed company and it's controlling shareholders, directors(outside or inside ), officers(management), CPAs owe fiduciary duty (including duty of care and duty of loyalty )to investors. These groups mentioned above should take legal liability for misrepresentation in financial reporting if they breach their fiduciary duty.Chapter Four Jurisprudential analysis of civil liability for misrepresentation in financial reporting. This chapter focuses on the nature, elements, imputation, plaintiff, damage for recover, suit procedure of civil liability for misrepresentation. In this Chapter, the author gives his following views of points: (1) misrepresentation in periodic financial reporting is a tort; (2) "frau...
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