Research On Financial Fraud Motivation And Governance Strategy Of New Energy Enterprises

With the growing shortage of energy and people’s improved awareness of environmental protection, clean and sustainable new energy industry has gain attention of various countries, new energy industry increases tremendously. However, financial fraud cases in new energy industry are continuously emerging under the fast development of new energy industry, such as Sinovel, Tanon, Kingsun and CHAORI Solar. These cases of fraud will not only bring investors huge losses, make the public lose confidence in capital market but also disturb the order of market economy and send shock waves. Growing financial fraud have caused the wide attention of all social circles. Financial fraud is more general and harmful in the new industry whose standards are imperfect.Sinovel is a typical enterprise in new energy industry and its financial fraud cases have caused a big shock in market. Sinovel is a new company but its issue price on their first day of trading is 90 yuan / share, it is a record of SSE’s IPO in 20 years.Then a series of negative news broke out and put it in the spotlight, such as accounting errors, stock prices dropped and shareholders’ claim. In November 2015,Sinovel’s financial fraud case is judged by CSRC formally. Based on the case study of Sinovel, this paper is trying to analyze the background, motivation and trick of this financial fraud case. Sinovel’s ups and downs mirror common problems of new energy industry. Compared to other industry, new energy industry is apt to commit fraud because of the risk of policies, technologies and capital.Its motivation is special. This paper treats Sinovel as a sample of the new energy enterprises, discuss principles through events and expand conclusions. Then combine with its problems and characteristics of new energy industry, put forward countermeasure of financial fraud governance, in order to provide enlightenments of new energy industry’s financial fraud governance.This paper is divided into seven parts: Part I: Introduction. Introduce the background, significance, method and innovation of this subject. Part II: Literature. Study the domestic and international financial fraud literature then review them from motivation, recognition and governance. Part III: Concept and theory. Introduce the concept of new energy industry and financial fraud. Then study the motivation of financial fraud. Part IV: Analyze the characteristics of new energy industry. Analyze the status of development and special risk of new energy industry. Part V: Case study. Analyze the situation of Sinovel, including its development situation, process of financial fraud, ways and result. Part VI: Analysis of motivation. Using the Theory of Fraud Risk Factors to analyze motivation of Sinovel’s financial fraud, including the morality of managers, internal governance, external supervision and so on. Part VII: The plan of preventive measures. Combine with Sinovel’s financial fraud and characteristics of the new energy industry, try to summary inspiration for the new energy industry.