Feature Analysis On Financial Fraud Of Listed Companies And Its Applied Research In Investment Portfolio

Since the establishment of Shanghai Stock Exchange and Shenzhen Stock Exchanges in 1990,the capital market of China has been developing with each passing day.According to the statistical caliber of Wind information,there are 3485 listed companies in China,with a total market value of RMB 56.7 trillion,accounting for 68 percent of the GDP in China.Judging solely from the number and market value of listed companies,the development speed of China in the capital market during the past over 20 years is already on a par with that of the developed countries in Europe and the United States during the past 200 years.However,as the IPO of enterprises will bring huge wealth and brand effects,the number of listed companies has surged in recent years,and meanwhile,the financial fraud phenomenon of listed companies has also become common,bringing great challenges to the supervisory authorities of China.This thesis analyzes the listed companies with financial frauds from 2007 to 2017 as the statistical sample and summarizes the laws of listed companies in financial fraud in terms of distribution of fraud areas,industry distribution,fraud methods and fraud characteristics.Meanwhile,four typical listed companies,which respectively are China Huishan Dairy Holdings Company,Leshi Internet Information&Technology Corporation,Beijing Xinwei Technology Group Co.,Ltd.and Joyvio Agriculture Development Co.,Ltd.,were selected as research models for this thesis.Based on the financial fraud methods of these four companies,the key distinguishing elements of financial fraud were summarized for an early warning of financial fraud phenomenon and the investment decisions conducted for short selling of fraud companies.As the stock issuance system of China is gradually moving from the approval system to the registration system,the number of listed companies will continue to grow rapidly.Since the mixed nature of listed companies,it is particularly significant to identify the health condition of listed companies in financial indexes.Besides,recent emergence of financial fraud cases has presented great challenges to professional institutions,including brokerage investment banks,brokerage research departments,funds,insurance,QFII and other professional investment institutions,and domestic or overseas professional institutional investors.Therefore,it is of particular importance to identify and verify the financial fraud of listed companies.This thesis attempts to make a comparative study from the perspectives of financial fraud,accounting fraud,management fraud,and statement whitewashing,and summarizes the logic and core indicators of financial fraud.Through conducting long-term tracking,professional research and risk warning on listed companies with financial frauds,the short-selling investment strategies on those companies can lead to obtainment of excessive return on investment in the market,thereby promoting reasonable pricing of stocks and optimizing market resource allocation.