Research On Listed Companies’ Financial Fraud

Listed companies’ financial fraud came together with the birth of stock market.Since the first case of financial fraud was found,fraud can be described as an endless stream running on different companies,which includes some of the famous enterprises all over the world.According to investigations by the China Securities Regulatory Commission,the number of Chinese enterprises fraud cases is increasing every year.These fraud cases caused huge harm and serious damage to interests and confidence of investors and strong resentment among the public which brought in tremendous negative effect on developing a healthy and orderly Chinese economy environment.Because the highly expending of fraud cases could bring in seriously bad influence on economy,in order to protect the vital interests of small investors and maintain the healthy and orderly development of the market economy,to research on the phenomenon of financial fraud has a major significance to society.This paper focus on researching on phenomenon of Chinese listed companies’ financial fraud,based on the study and review on articles and papers combined with theoretical and statistical analysis.Firstly,it theoretical analysis on the motivation of financial frauds,based on fraud triangle theory: pressure,opportunity and rationalization excuse.Secondly,it statistical analysis on the types,industries,persistency and audit opinions of the Chinese enterprises financial fraud cases,based on 206 cases issued by the China Securities Regulatory Commission through 2010 to2014 screened from CSRC announcements and CSMAR database records.Thirdly,it also studies on the common fraud means and recognition methods according to statistics and analytics on real fraud cases.Finally,it gives three recommendations about improving internal control,government regulation and external audit to prevent listed companies’ financial fraud.