Study On Identification Of Financial Reporting Frauds In Chinese Listed Companies

With the advent of economic globalization and the era ofknowledge-based economy, the financial reporting fraud were spotted frequently inglobal securities market. To examine the financial reporting fraud has become anincreasingly important academic and industrial topic at present.Since the industrial backgrounds and characteristics vary from one industry toanother, there are as well some differences with the financial data in the listedcompanies of different industries. As a result, it has practical significance to improvethe recognition rate by establishing targeted and exclusive model for each industry.Considering the fact that the manufacturing listed company is the main strength and itoccupies relatively higher proportion in the total number of chinese listed companies,so studying the recognition of their financial reporting frauds is of significantimportance.The article was based on the related theory study on the recognition of financialreporting fraud; focused on the manufacturing listed companies; took the fraudrecognition in such companies as starting point and the recognition study as main line;depended on the sufficient understanding of financial reporting fraud motives andmethods; researched and hypothesized based on fraud triangle as well as the state’spractical situation; selected reasonable model variables; incorporated the LogisticRegression Model principle; established the Logistic Regression Model that targets atthe financial fraud recognition in manufacturing listed companies; and performedefficiency testing and empirical analysis by sampling method.(1)Established the Logistic Regression Model for financial reporting fraudrecognition in manufacturing listed companies. This paper took the manufacturinglisted companies, with or without financial reporting fraud, as samples, researchedand hypothesized according to the fraud triangle, undertook hypothesis testing onmodel indicators, finally established the Logistic Regression Model and analyzed itsexamine results.(2)Improved the recognition rate on manufacturing listed companies’ financialreporting fraud. The paper established the recognition model based on the fraudtriangle, through the examining of samples, the results showed that the model is moreeffective than the one for non-manufacturing listed companies.(3)Came up with the indicator analysis for financial reporting fraud recognitionin manufacturing listed companies. The paper established the indicators system andrecognition model, analyzed the results based on fraud triangle and LogisticRegression Model principles.According to what was said, the research on financial reporting fraud recognitionin manufacturing listed companies improves the fraud recognition accuracy and efficiency and provided scientific basis to the fraud recognition, which will be helpfulto the development of China’s securities market.