China’s Listed Companies Financial Fraud Case Studies

The financial fraud of listed companies can lead to many seriousproblems, it will not only cause harm to investors, but also will have impactson the listed company itself and affect the healthy development of the stockmarket. The false financial statements made investors to make wrongjudgment on their investment of listed companies, it brings huge economicbenefits to the final actual controllers of the listed companies. However, thevicious cycle of the stock market will create more and more lies until makingthe irreparable hole. As a result, the investors will suffer a huge damage, andthe listed companies also will face a crisis of confidence. On the other hand,the financial fraud leads to a variety of social market economy problems.The financial fraud of listed company is not a unique problem of China,it also happened in the stock markets of world. It is well known that at theearly21st century, the famous "Enron bankruptcy," greatly undermined thecredibility of the capital market and made investors lose confidence. Then,after Enron, the world’s financial fraud from big corporations, such as XeroxCorporation and World Communications Company, hit the New York stockmarket heavily. It is also because of this, Arthur Andersen accounting firm(one of the original five major international accounting firms) went to bankruptcy, U.S. investors and global investors are unprecedented lack ofinvestment security. In this paper, I select the case of Lecron Energy SavingMaterials, which is listed in the CEM. I make comparison with companies inthe same industry, and analyze the financial indicators, assets, reasonablenessof its results of operations, the possibility of financial fraud and earningsmanagement, etc.This paper will list the common ways of financial fraud of Chineselisted companies, especially in the current economic market environment.Through in-depth study of the relevant case, revealing although China’sregulatory system has improved, but the financial fraud still occurs. However,with the development of a variety of regulatory measures, the financial fraudof listed company is becoming more subtle and upgrading. This article willfind out what are the new features of the financial fraud in the new era, andmake recommendations on how to govern the financial fraud of listedcompanies.