Four-Dimensional Analysis On The Factors Of Fraudulent Financial Statements

Over the past 10-plus years, China has been hit by a rising number of scandals of fraudulent financial reporting in the securities market, which have not only inflicted heavy losses on investors, but also undermined the principles of "fairness", "impartiality" and "openness", upon which the security market depends for its survival and development. In light of this situation, the academic community conducts persistent research of fraudulent financial reporting, with considerable results obtained. Moreover, there are some questions on which people have yet to reach consistent conclusions. These questions are: (1) What are the influencing factors of fraudulent financial reporting in China? (2)What are the characteristics of the financial variables and corporate governance variables of companies with fraudulent financial reporting? (3) How can fraudulent financial reporting be effectively governed? In an attempt to seek answers to the above questions, this paper adopts the method of combining normative studies with empirical analyses, and then uses methods such as the mean T testing, Mann-Whitney U testing and plural regression analysis to investigate the influencing factors of financial and corporate governance.This paper consists of the following six chapters. In the first chapter, the purpose and foundation of the selection of the thesis is introduced with a brief narration and comment to the present situation of research in the domestic and foreign corresponding field, and the framework and method of the research and the innovation of this paper is brought out as well. Chapter 2: Theory Analysis of the Factors of Fraudulent Financial Statements. This chapter provides an analysis of the cause of fraudulent financial reporting in terms of benefit driving, financial stress, opportunity, institution and professional ethics. On the basis of this analysis, this chapter proposes the mechanism of the formation of fraudulent financial reporting. Chapter 3: Empirical Analyses of Financial Factors. As there are certain quantitative difficulties and unavailability of data for the benefit factor and the institution and professional ethics factor, this chapter mainly tests the influence of the financial factor on fraudulence using methods of the mean T testing and Mann-Whitney U testing to probe the features of the financial variables of the companies engaged in fraudulent financial reporting. Chapter 4: Empirical Analyses of Opportunity Factors. This chapter mainly tests the influence of the opportunity factor on fraudulence using methods of the mean T testing, Mann-Whitney U testing and plural regression analysis to probe the features of the corporate governance variances of the companies engaged in fraudulent financial reporting. Chapter 5: Governance of Fraudulent Financial Reporting. Through normative studies and Empirical studies of fraudulent financial reporting, this chapter provides the governance approach to improve the quality of financial reporting. Chapter 6: Research Conclusions. This chapter points out the academic contribution of the research.Through theory discussion and empirical studies of fraudulent financial reporting, this paper provides an analysis of the factors of fraudulent financial reporting in terms of benefit driving, financial stress, opportunity, institution and professional ethics, and tests the features of the financial variables and the corporate governance variances of the companies engaged in fraudulent financial reporting.