Case Analysis On Financial Fraud Of Luckin Coffee

With the deepening of my country’s opening to the outside world and the development of international capital markets,many companies have chosen to list in foreign capital markets to meet their own financing needs.Under the premise of limited capital,investors tend to prefer well-developed enterprises,and financial information,as one of the most important tools to reflect the development of enterprises,is often used by investors as an important basis for investment decisions.Due to the loose policy environment in foreign countries and the long-term loopholes in cross-border supervision,many Chinese stock companies have relaxed their requirements and tried to obtain more financing through financial fraud.As a typical Chinese concept stock company listed in the United States,Luckin Coffee took only 17 months from its establishment to its IPO,setting a new record for the fastest IPO in the world and attracting wide attention from international investors.In January 2020,Muddy Waters,a well-known international short-selling agency,exposed the financial fraud of Luckin Coffee,which temporarily brought Chinese stock companies to the forefront.Corporate financial fraud not only damages the company’s own image,but also increases the risks of investors,creditors and other stakeholders,disrupts the financial order,reduces the efficiency of the capital market,and is not conducive to the healthy development of the economy.In particular,the multinational listed Chinese concept stocks represent China’s international image,and it is more important to establish good credibility in foreign capital markets.This article selects Luckin Coffee,a typical Chinese concept stock company,as a case study object to introduce and analyze its financial fraud incidents in detail.First of all,this article introduces the company profile of Luckin Coffee,including the company profile,equity structure,listing structure,financing situation,business model and industry situation of Luckin Coffee.Secondly,it introduces the financial disclosure of Luckin Coffee,focusing on the analysis of abnormal indicators in its financial statements.Then,this article reviews the fraud incidents and analyzes and summarizes the financial fraud methods of Luckin Coffee.Then,based on the GONE theory,the article focuses on the analysis of the motivation of Luckin Coffee’s financial fraud,from the four dimensions of greed factor,opportunity factor,demand factor and exposure factor.Then,this article elaborates on the impact of Luckin Coffee’s financial fraud from different subjects,including the impact on Luckin Coffee itself,investors,capital markets,and Chinese stock companies.Finally,in response to the case of Luckin Coffee’s financial fraud,the article puts forward some thoughts on preventing financial fraud of Chinese stock companies.For enterprises,it is necessary to understand and abide by the laws and regulations of the capital market;strengthen the construction of the corporate integrity system;establish a reasonable equity structure;improve the governance structure and internal control mechanism;cultivate core competitiveness.For intermediaries,they should improve their professionalism and maintain their independence.For the regulatory authorities,it is necessary to increase the punishment while changing the regulatory thinking,strengthen the domestic supervision of Chinese stock companies,strengthen cross-border regulatory cooperation,and explore the introduction of third-party supervision.