A Case Study Of Eastern Gold Jade Financial Fraud Based On Fraud Triangle Theory

Since the establishment of the capital market,financial fraud of listed companies has emerged one after another,which not only damages the long-term interests of the company,but also seriously damages the interests of other stakeholders.Although China’s financial fraud recognition and governance of listed companies has been making progress,but the means of financial fraud of listed companies are more and more hidden,so it is still necessary to study the case of financial fraud.In this paper,Eastern Gold Jade,which was listed as one of the typical cases by China Securities Regulatory Commission in 2021,is selected as the research object.Eastern Gold Jade,once known as "the first share of jade",has now become "the first share delisted in 2021".This paper mainly adopts literature research and case analysis to the fraud triangle triangle theory,stakeholder theory and trust theory as a foundation,firstly,comb the newest achievement of financial fraud of scholars at home and abroad,which can be divided into three parts: financial fraud motivation,recognition and governance,and then found the differences between foreign and domestic research focuses.Secondly,the relevant concepts and theoretical basis involved in the case are introduced in detail.Thirdly,this paper introduces the listing process,operation status,means and consequences of fraud of Eastern Gold Jade.Fourthly,based on the above content,this paper pay more attention to analyzes the motivation and hazard of financial fraud,the motivation analysis part which mainly based on the fraud triangle theory and the characteristics of Eastern Gold Jade,will be divided into three factors: pressure,opportunity and rationalization.Which are divided into specific motivations,such as the overstocking of original jade,the uncertainty of original jade value etc.The hazard analysis is mainly based on the stakeholder theory,which is divided into four parts: Eastern Gold Jade,small and medium investors,creditors and capital market.Eastern Gold Jade was delisted compulsively;small and medium investors accept loss passively;creditors have difficulty recovering their principal;the stability of capital market has been disturbed.Finally,based on the above motivation analysis and harm analysis,and combined with the trust triangle theory(a supplement to the fraud triangle theory),the proposed prevention and control measures for financial fraud are divided into four aspects: relieving fraud pressure,reducing fraud opportunities,eliminating fraud rationalization and building a trust system.In this paper,based on the motivation and harm analysis of Eastern Gold Jade financial fraud,and combined with the relevant prevention and control measures of financial fraud come to the conclusion :(1)financial fraud can not fundamentally solve the problems of the company,no matter fraud means how hidden are,they will be exposed and the person of financial fraud will be punished by the law;(2)Eastern Gold Jade financial fraud was caused by pressure,opportunity and rationalization;(3)From a long-term perspective,financial fraud is harmful to the enterprise and stakeholders,managers should operate the company legally and in compliance;(4)Based on the motivation and harm analysis of Eastern Gold Jade financial fraud,and combined with the trust triangle theory,relevant prevention and control measures are put forward from four aspects: relieving fraud pressure,reducing fraud opportunities,eliminating fraud rationalization,and building a trust system,which are conducive to the recognition and governance of financial fraud.It is expected that the specific measures proposed by the above analysis can make some contributions to the recognition and governance of financial fraud.