Study On Accounting Fraud Identification Of Chinese Public Companies

In the past two decades, the Chinese capital market has gained remarkable achievements. However, along with its development, numbers of problems have been attracting more and more concerns. The most popular and severe phenomenon is the accounting information fraud in public companies, which is also known as accounting cheating. The accounting fraud changes with the development of Chinese capital market from being easily recognized at the very beginning to more and more difficult to be distinguished which had caused more and more troubles to the broad masses of consumers and regulation authorities. Although there were many similar researches in the past, the results were not satisfying. Therefore, this article will study on financial statement fraud of Chinese public companies through deeply analyzing the causes, approaches and recognition method of financial statement fraud with an aim to instruct empirical research on the samples of financial statement fraud of Chinese public companies so as to build up a more accurate distinguishing model towards profit cheating.The main part of the thesis consists of three parts:The first part is Chapter One, the Preamble, which discussed the significance, objective, Innovation and study line of financial statement fraud.The second part is composed of Chapter Two and Chapter Three. Chapter Two, the Literature Review, finds out the starting point of the research through summarizing previous study results. Chapter Three illustrates the basic theory of financial statement fraud and analyzes financial fraud at the theoretical level.The third part is divided into Chapter Four and Chapter Five. I chose66public companies (with80fraud samples in the aggregate) which had been publicly punished by CSRC (China Securities Regulatory Commission) and Ministry of Finance of China for profit cheating and control samples with certain criteria as research targets.1succeeded in choosing5index variables and defining the original Logistic model through analyzing main approaches to cheating, the situation of actual samples and referring to previous study results. Then I introduced multi-dimensional vector space index SBIC and explained multi-dimensional space vector theory and its use in accounting fraud identification and I set up the improved Logistic model by virtue of the introduced multi-dimensional space vector index SBIC. Through the empirical analysis, I found out that X2=account receivable/sales revenue, X3=asset-liability ratio=gross liability/gross assets, X5=cash per share (CASH)=cash/capital stock, X6=SBIC. The fitting degree of the four indexes is very high and the results are very fruitful. The final study result indicates that the identification accuracy rate of the improved model is20.00%better than that of the original one.Last but not least, through this research I got some enlightenment and proposed relevant advices.