A Case Study On Financial Fraud Of Green Earth Company

With the rapid development of China’s economic and the prosperity financial sectors, the number of listed companies continues to grow in China. However, the "quality" of listed companies has not increased accordingly. In recent years, the listed company’s financial fraud cases are common. As for listed companies, the authenticity and integrity of their financial information is very important because they are directly involved into the operation of the whole stock market. Financial fraud not only does harm to the investors and creditors, but also affect the healthy development of the market economy. Therefore, the case study of typical listed companies’ financial fraud is of great practical significance.Yunnan Green Land Company’s financial fraud is such a typical case. Green Earth Company landed on stock market in 2007, becoming the first listed company in the field of green seedlings, which had achieved many "good results." However, these "achievements" were built on the basis of financial fraud and fraudulent listing after the investigation. The company enlarges the number of income and assets in many years. We can analyze the company’s motive, opportunity, excuse of financial fraud combined with financial fraud triangle theory, trying to seek reasons of financial fraud of the Green Earth from two angles in internal motivation and external factors.The study of motivations of Green Earth Company’s financial fraud is based on the financial fraud triangle theory and risk factors of financial fraud theory. For prevention measures and suggestions on listed companies’ financial fraud, they are made primarily on the basis of the motives and reasons of the Green Earth fraud. Specific suggestions include improving organizational structure; strengthen internal control and external supervision and improving the legal supervision system and so on. This can be targeted and combine theory with practice efficiently.