The Research Of The Board Characteristics’ Influence On Financial Fraud In Chinese Public Companies

The accounting scandals of American companies Dell, Chinese companies Beidahuang Agriculture and Baoshuo Stock had generated devastating consequences on the society. The conception of financial fraud becomes to be known by most people. Though, the related departments of every country have enhanced the penalty of fraud, many corporations still do not give up for their financial temptation. The financial fraud of the public companies has not only caused great economic loss of the investors, but also brought bad influences to the society. Financial fraud has become a common phenomenon and the ways to produce a fraud are crafty and untraceable. It is high time to take actions to recognize and decrease the probability of financial fraud.There is no lack of researches on the issues of financial fraud. Scholars domestic and overseas have had many valuable studies on financial fraud from different angles,and achieved certain research findings. This paper tends to combine theoretical method with empirical method to analyze whether the board characteristics have influence on company’s financial fraud, and what kinds of influences they have.Combined with the financial fraud motivation theory and the corporate governance theory, this paper selects the relevant board characteristics: the board size; the proportion of independent directors; the proportion of female independent directors;the education level of female independent directors; the shareholding proportion of the board; the frequency of board meeting and the leadership structure, and proposes the hypotheses of this paper. The sample public companies of the research are divided into two groups, one is the fraud group, the other is the compare group, and each group has 163 public companies. The fraud group is chosen from the public companies which exiting financial fraud in the period from year 2009 to year 2013.Though the SPSS21.0 analysis software, this paper works out Descriptive Statistics,Pair T test and Logistic regression analysis and comes to the conclusions: enlarging the board size will increase the probability of financial fraud; increasing the proportion of female independent directors will increase the probability of financial fraud; the higher education level of female independent directors will decrease the probability of financial fraud; the more frequent the board meeting is, the higher the probability of financial fraud is. However, the proportion of independent directors, theshareholding proportion of the board and the leadership structure have not much influence on the financial fraud, or the influence is not obvious enough. Last, based on the conclusions, this paper gives some suggestions about the board size, the independent board system, etc. in order to perfect the board institution and decrease the probability of financial fraud in public companies.