An Experimental Research On Occupational Fraud Tendency Based On Behavioral Economics

As an abominable phenomenon that emerges in the companies and economic organizations, occupational fraud brings great damage and loss, and this harm increase steadily. Generally, occupational fraud includes the following three kinds of cases:asset misappropriation, corruption and financial statement fraud. Association of certified Fraud Examiners (ACFE) released the<Report to the Nation Occupational Fraud and Abuse> in2012. According to the report, applied to the2009-2011Gross World Product, this figure translates to a potential projected annual fraud loss of more than$3.5trillion. Compared with2007-2009, this figure increased20.69%. Besides, occupational fraud is not an individual phenomenon, it’s a common phenomenon throughout every countries and regions, industry and organizations, which brings irreparable damage and loss.Research and govern on the occupational fraud problems’are extremely urgent. However, previous research of fraud behavior are mostly based on the "rational man" hypothesis, that failed conform to the "bounded rationality" theory to analysis the problems, which often ignore the presupposition that the behavior of individual decision is subjective and uncertain. Therefore the control measures which are taken into action based on the former research cannot work well.Considering these factors, this paper attempts to research basing on the "bounded rationality" hypothesis of individuals, with the prospect theory that pertain to the behavioral economics theory and its related theory as a foundation, which adopts both the experimental research method and normative researches methods. I explore the formation mechanism of fraud and the individual fraud decision-making process, which aims to deepen the understanding of the occupational fraud and from the individual’s psychological aspect to put forward the control strategy of occupational fraud. Thus, for the government to formulate the laws and regulations, the enterprise to optimize the internal management structure and stakeholders to make the right decision, this paper provides the reference suggestion.This paper concludes five parts as follows:The first part is the introduction of the paper. This part mainly aims at introducing some basic problems of this paper, including the motivation of research selection and research significance, and the choroid of research, the article structure arrangement and the research methods.The second part is the literature review. In this part, we putting the different views to research fraud behavior as the main line, and putting the prospect theory and its related theory as the breakthrough point, and putting the accounting and auditing behavioral research which based on the prospect theory as the key point, generalize and summarizes the related literature both at home and abroad. In addition, this part is also including the shortcomings of the existing literature about occupational fraud behavior and possible future research direction.The third part is the concept definition and research category, theoretical analysis and research assumptions. First of all, this part defines the related concept of this paper, and expounds the research topics, made clear the research category. Then mainly elaborates the relation between the occupational fraud and prospect theory as well as its related theory. Furthermore, I analyze the formation mechanism of occupational fraud. According to the above analysis, this part put forward the experimental research hypothesis.The fourth part is the experimental research scheme and the experimental results as well as the hypothesis testing. As the key part in this paper, we designed the fraud behavior situation decision-making case based on the experiment assumptions and the enterprise on-the-job personnel interview, and using the experimental research to explore the participants" fraud decision-making process.The fifth part is the research conclusions and policy recommendations. This part both includes the research conclusion which based on the experimental results and the corresponding policy recommendations. In addition, this part includes this paper’s Innovation points, study limitations and enlightenment for future.This paper mainly draws the following conclusion:First, the individuals subjective frauds expected utility has an positive effect on fraud tendency; A fraud behavior have not been found to do the fraud behavior again, that its fraud tendency more than a fraud behavior is found; But his material and spiritual benefits to the degree of preference fraud is not inclined to influence there. Second, according to the anchoring effect theory:the policy’s induct function has a significant influence on fraud tendency; In addition, the difference level of enterprise staff ethics has a significant effect on fraud tendency; Third, the difference expected damage and loss aversion has an significant effect on individuals’fraud tendency; Fourth, the different information frame have a noticeable impact on fraud tendency; And, the risk of preference and corruption tend to have a significant positive correlation.The paper’s innovation point is as follows:on the one hand, we put the occupational fraud and prospect theory as well as its related theory by combining analysis, explore the formation mechanism of fraud behavior, which in order to put forward the corresponding frauds preventive strategy. On the other hand, we adopt the experimental method to research the occupational fraud, not only broaden the choroid of research but also expand the research methods.