A Study On The Economic Analysis And Governance Of The Accounting Fraud In Listed Companies

Accounting fraud is a tough issue throughout the world. The issue of accountant has already so dramatically influenced our life of everyone that the outstanding accounting scholar Mr. Yang Shizhan greatly claims that"to confuse the world, confuse accounting first; to govern the world, govern accounting first."At present, the situation of accounting cheating has not been fundamentally prohibited, and the behaviors and working order of accounting still need further improving. This is the premise for the author of writing this thesis; the sever reality of accounting fraud and the great significance of governing accounting fraud, are the original motivation for the author's resolution of exploring this field. In the past, some scholars confined the study on accounting fraud to the layer of accounting itself and management, which can neither provide the reasons of its occurrence and process with the evidence which owns sufficient explicable and persuasive power, nor propose an effective governing plan.Facing this sever reality of the accounting fraud in listed companies, the theoretical circle discusses the reasons and governance of this issue form different layers and perspectives. However, the author deems that any general discussion is not helpful to resolve this issue. The China Securities Regulatory Commission perfects and improves the accounting system and accounting policies every year, which is undoubtedly helpful to force out the space of the operation upon information of an accountant in a listed companies, but may not be a strategy that can solve both manifestation and root of an issue. This thesis tries to explore the fundamental economic root and formative mechanism of the accounting fraud in listed companies from two different perspectives, in order to seek a way that can fundamentally prohibit the accounting fraud in listed companies. Firstly, synthetically apply such theories as the theory of information asymmetry, the theory of insider control, the theory of bounded rationality and the theory of corporate governance structure, comprehensively analyze the complex economic phenomenon of accounting fraud and important accountant behaviors, and utilize the analysis frame of economic theory to discuss the fundamental root of the form of the accounting fraud in listed companies. Secondly, form the perspective of the external environment of governing accounting information, analyze during the process of accounting information disclosure, the relevant stakeholders'objective function and behavioral option, through analysis way of the game theory, in order to find the formative mechanism of the behavior of accounting fraud, and thus provide a new kind of conception and strategy for fundamentally solving this issue.It is a vital method of developing the accounting study to bring the advanced outcomes of the economic study into the accounting study. A significant accounting topic should be an issue closely related to the accounting practice in China, and an important, difficult and central issue during the process of accounting reform in China. Through a length consideration, the author finally chooses economics as the theoretical tool of studying accounting fraud, which is the main skeleton of constructing the content of this thesis. The present issue of the accounting cheating in listed companies is analyzed according to the frame of"the analysis of reality—the analysis of reason—the analysis of economic theory—the analysis of game theory—the way of solution". 1. The analysis of reality and the analysis of reason. On the basis of clarify the definitions related to accounting fraud, the thesis analyzes the present situation and harm of the accounting fraud in listed companies, and then on this base, analyzes the external reasons and internal reasons of the accounting fraud in listed companies.2. The analysis of economic theory. The thesis defines the preconditions of the accounting fraud in listed companies, and with the"economic person"hypothesis in economic theory as the premise, analyzes the formative root of accounting fraud. On this basis, the thesis makes an in-depth analysis of the accounting fraud in listed companies with reference to such economic theories as the property right theory of the school of new institutional economics, the principal-agent theory in information economics, the information asymmetry theory, the"insider control"theory of, and the contract theory the theory of bounded rationality, and finds the economic root of the accounting fraud in listed companies, in order to seek the theoretical support for study the strategies of governing the accounting fraud in listed companies.3. The analysis of game theory. The thesis makes a game analysis of the behavior of the account cheating in listed companies and accounting governance. The thesis analyzes the game subjects of the accounting fraud in listed companies and every game subject's optional behavioral strategies and pay function (or revenue matrix), in order to urge the efficiency of allocating the accounting information resources to reach"Pareto Optimality"and realize the Nash Equilibrium of accounting information disclosure.4. The way of solution, i.e. the strategy and solution of governing the accounting fraud in listed companies based on economics. Through the above analysis of the economic root and mechanism of the occurrence of the account cheating in listed companies, the author proposes that the humane atmosphere of"four no-dos"and the system frame should be established, in order to effectively decrease the occurrence of the accounting fraud in listed companies. The first one is"no necessary to do", i.e. no necessary to venture on cheating; the second one is"no willing to do", i.e. to realize the disgrace of cheating and feel shameful from the bottom of heart; the third one is"no dare to do", i.e. facing the severe examine and punishment, a person dare not cheat due to the evaluation of"loss expectancy"; the forth one is"no ability to do", i.e. strict arrangement of system makes it impossible for all parties involved in cheating to get the opportunity of cheating, and achieve their own goals through cheating.The whole conception of this thesis is to interpret and analyze numerous difficult issues in the accounting field such as the nature, formative reason and governance of accounting fraud from the economic perspective, and on the basis of carefully arranging the past studies, sets a new researching conception of comprehending and governing accounting fraud. The innovative points of this thesis lie in the following three aspects:1. Form the perspective of cost and benefit, the thesis analyzes the economic reasons of failures to prohibit the accounting fraud in listed companies. The thesis applies the game theory in economics into the analysis of the reasons for causing the accounting fraud in listed companies, and through the analysis methods of game theory, analyzes as for the accounting fraud in listed companies, the relevant stakeholders'objective function and behavioral option, through analysis way of the game theory, in order to find the formative mechanism of the behavior of accounting fraud, and thus provide a new kind of conception and strategy for fundamentally solving this issue.2. From the perspective of the"bounded rationality"theory, the thesis analyzes the formative process of accounting information, in order to strictly control the process, end the fraud behaviors at source, and ensure the quality of accounting information. Prof. Herbert A Simon, an American winner of the 1978 Nobel Prize in Economics, advocates discussing the issue of accounting fraud from the relationship between accounting fraud and the evaluation of corporate performance. Based on the"bounded rationality"theory,"the theory of accounting information formation"is proposed, i.e. to control accounting information from the formative process of accounting information, conduct man into strictly controlling the process, and ending the fraud behaviors at source. To prevent accounting cheating, it is not only needed to proceed with accounting organizations and accountants, and the governmental departments of macroscopic management, but also strive for establishing a scientific and reasonable system of evaluating corporate performance, altering the method of only focusing on examining"result"situation instead of the procedures or process which lead to the result. It is proposed to greatly focus on analyzing the whole accounting process, focus on the rationality, legitimacy and science of the formative process of accounting information, and focus on strengthening the examine of the whole formative process of accounting information, while selecting relevant design for the examination scheme and index of performance evaluation.3. Based on the"insider control theory","the theory of accounting information disclosure process"is proposed, i.e. to control the quality of accounting information from the whole process of accounting information disclosure, and prevent the accounting information distortion. The accounting information in listed companies will experience three steps from the occurrence to public disclosure. Firstly, after the economic business occurs, the accounting subjects conduct accounting and formulate such accounting information as financial statements, then the Certified Public Accountants are delegated to the accounting of such accounting information as financial statements, and the offer of audit report, and finally, the financial statements and audit report are announced publicly after being approved by the auditing offices of the State Council's securities regulatory and financial institutions. During the whole process of accounting information disclosure, to ensure the reality and completion of accounting information is the responsibility of the accounting subjects, to ensure the reality and legitimacy of audit report is the responsibility of the Certified Public Accountants, and to examine and punish fraud behaviors is the responsibility of securities regulatory and financial institutions. The situation of assuming the responsibility for these three aspects will greatly affect the quality of accounting information.