A Case Study On Financial Fruad Of Sainty Marine Corporation LTD.

Since the establishment of capital market in China,it has developed rapidly.The capital market has brought huge wealth and has also raised problems such as financial fraud.As the main body of the capital market,the financial fraud of listed companies not only affects the national taxation level,but also damages the interests of investors,and is more likely to lead to the country’s false macroeconomic policies based on false information.Among financial fraud methods,related party transaction fraud is widely used because of its concealment.Therefore,it is of great significance to study the identification methods,common methods and motivations of listed companies’ financial fraud behaviors to prevent fraudulent behaviors.This paper takes the financial fraud case of Sainty Marine Corporation as an example.Sainty Marine Corporation is not only the largest state-owned shipbuilding enterprise in Jiangsu Province,but also the first bankrupt listed shipbuilding enterprise in China.It has many fraudulent methods and involves a large number of related party transactions,so it is typical and representative.Sainty Marine Corporation and its related party Mingde Heavy Industries concealed the related party relationship between them,and used the related party transactions to carry out a large amount of financial fraud,so as to achieve the whitewashed statement and avoid the delisting pressure.In this paper,we start from the signification of financial fraud by Sainty Marine Corporation,analyze the financial fraud methods of Sainty Marine Corporation,use the theory of fraud triangle to explore the reasons for its financial fraud,and put forward preventive suggestions.This paper is divided into four parts: The first part is the introduction,which introduces the background,significance,methods of the research,contents,the theoretical basis and literature review which are involved in this paper.The second part is an analysis of the overview,identification of financial fraud and the methods Sainty Marine Corporation used.The third part uses the theory of fraud triangle to explore the motivation of the financial fraud of Sainty Marine Corporation from three aspects: pressure,opportunity and excuses.The fourth part is to put forward preventive suggestions.The paper believes that there are three main reasons for Sainty Marine Corporation to carry out financial fraud: First,the pressure factors mainly include performance pressure,delisting pressure,cost rising pressure and capital exchange rate pressure;second,the opportunity factors mainly include the imperfect internal control system of Sainty Marine Corporation,the unreasonable internal governance mechanism and the lack of external supervision.Many factors have given the opportunity for financial fraud to be implemented.Third,the excuse factors mainly include the lack of due responsibility and risk awareness of the management and other employees of Sainty Marine Corporation,so they find excuses for their fraud.In view of the analysis results of the previous article,this paper proposes the prevention of listed companies,mainly including three aspects: Firstly,through the formulation of a reasonable development strategy,cost control and rational use of funds to ease the company’s performance pressure;secondly,by improving the internal control system,optimizing the shareholding structure,enriching the composition of the board of supervisors,the company’s operating system will be more thorough,and it will be more difficult to implement financial fraud;finally,by strengthening the moral construction of employees,improving the professional competence of management and playing the regulatory role of the government to reduce the possibility of financial fraud.The authenticity and integrity of the listed company’s financial information are the premise and guarantee for the healthy development of the capital market.As the main body of the capital market,listed companies have the responsibility to actively participate in market supervision to prevent financial fraud and ensure the healthy development of the capital market.