Case Study On The Suppression Of Financial Fraud By Short-selling Mechanism

During the four decades of reform and opening up,China's economic construction has achieved great success.The size of the company has also been growing,there has been a big rush to go public.Many companies have chosen to list overseas in order to expand overseas markets.However,the following problems are gradually exposed,and the financial fraud of enterprises is increasingly prominent.Obviously,China's current methods to curb financial fraud of listed enterprises are not enough to meet the demand of supervision.Short selling mechanism,as a new type of market behavior,provides more possibilities to curb financial fraud.Based on the theory that the short selling mechanism restrains the financial fraud,this paper studies the case of huishan dairy co.,LTD.,and concludes that the short selling mechanism can restrain the financial fraud of listed companies.This paper first interprets the theory and concept of the short-selling mechanism to restrain financial fraud and compares it with the previous theory of suppressing financial fraud.Secondly,this paper analyzes the current situation of financial fraud suppression of China's listed companies,and analyzes its suppression methods and effects.Then,the short case of muddy water is introduced and analyzed.This paper introduces the company and its background,the means and process of short selling.In order to further study the positive role of short selling in restraining financial fraud of China's listed companies.This paper makes a detailed analysis of the case of hun shui successfully shorting huishan dairy.Through the case introduction,the paper analyzes the negative effects and risks of the short selling mechanism on the financial fraud of listed companies.Therefore,it is concluded that the short selling mechanism has obvious effect on restraining the financial fraud of China's listed companies.However,at present,China's financial system is not perfect enough.Short selling is still at the exploratory stage for us.How to avoid risks and make healthy use of shorting the "hand of the market" are also given in the end of this article.Finally,it is concluded that as long as the risk of short selling mechanism is avoided,short selling is of high practical value to restrain the financial fraud of listed companies.