Listed Company’ Financial Fraud Strategy Research Based On GONE Theory

Financial reporting fraud at home and abroad has been a much-maligned topic. Despiteincreasing attention has been paid on financial fraud issues and actively control measureshave been taken and the fraud was repeated. Therefore, how to ensure the quality ofaccounting information and how to manage financial fraud has become an importantresearch topic for theoretical investigators. The study is significant for standardizing theorder of listed companies, protecting the rights of investors and safeguarding nationaleconomic development.This paper aims the information disclosing of China’s listed companies, and analyzesthe mechanism of financial fraud of China’s listed companies, and build the recognitionmodel of financial fraud companies, and finally propose rationalization measures forpreventing and controlling the problem of financial report fraud. The main contents of thispaper and conclusions are as follows:The mechanism of financial reporting fraud based on GONE theory. Firstly, this paperanalyzes the impact of G (greed), O (opportunity), N (needs), E (pressure) on financial fraud.Then, analyzes the mechanism of financial reporting fraud. Lastly, summarize that thefinancial reporting fraud is driven by profit, and when the cost of fraud is greater than thebenefits of fraud, regulatory authorities will choose to financial fraud.To create a model to identify fraud, this paper selected88public companies as sampleswho were punished because of financial reporting fraud during the year of2000-2010, and alogistic regression model was constructed based GONE theory to examine what factorsmight improve financial reporting fraud by regression analysis.The conclusions and countermeasures, this study shows that: the higher the lever ofgreed caused by the management’s risk appetite and residual claims is, the greater thepossibility of fraud will be; the more imperfect the corporate governance structure is, themore opportunities the corrupt practices will get and the more likely the corruption willconduct; the greater the demand for additional rationed shares is, the greater the possibilityof organizing fraud will be; the higher the change frequency in accounting firms and thetype of audit opinion is, the smaller the possibility of fraud will be. In conclusion,containing personal greed, reducing the chance of fraud, curbing the expansion needs of theorganization and enhancing the pressure of external audit are all effective ways to govern the listed companies’ fraud.