Case Analysis Of Green Earth’ Financial Fraud

Fraud events of listed companies in China happen from time to time, generally, itmakes the investors, especially the small and medium investors sustain great loss.However, the securities market has developed nearly twenty years in our countrytoday, there is still a financial fraud events such as the Green Earth, This makes uspropose more urgent and strict requirements for the regulatory ways and means of theregulatory authorities. Through the analysis of green earth’s financial fraud, wesuggest that to strengthen financial supervision, regulate the management of listedcompanies, strengthen risk control, we put forward the countermeasure andsuggestion at the same time.This article is divided into four parts.The first part is the introduction, it introduces the main contents and innovativepoints of this article;The second part describes the process of the green earth in the company’sfinancial fraud case, and makes a detailed analysis of how to use the inflated assets,inflated income, inflated profits to achieve the aim of financial fraud.The third part pointed out the internal motivation of green earth in the event,such as companies eager to listed "misappropriating" and the corporate governancestructure exists defects，as well as gives the external causes，such as building of thelegal system is not in place，intermediaries and the corporate existence of theconspiracy，the cost of default is low and lack of supervision of the local government.Explain why such a serious fraud case can not be severely punished.The fourth part is my countermeasures and suggestions. Compared with theHong Liang international financial fraud case which occured at beginning of the year,particularly compared the basis of punishment. And thus urge listed companies tostrengthen internal control and improve the system of independent directors tostrengthen the company’s internal governance, as well as improve the relevant lawsand regulations and strengthen law enforcement, investigate jointly and severallyliable,make full use of the supervisory role of the news media to strengthen externalsupervision. From these two areas discussed issues on how to strengthen the supervision of listed companies, regulate the construction and development of thesecurities industry, in order to protect the interests of minority shareholders.