Financial Fraud Case Analysis Of Luckin Based On Fraud Triangle Theory

Economic reforms have driven the emergence and growth of China’s capital market,and Chinese enterprises have entered into a mode of rapid development.When an enterprise develops to a certain height,it will encounter a common problem,how to raise more funds so that the enterprise can further develop.In order to better solve this problem and achieve fast and efficient financing,more and more companies are starting to list overseas.However,when pursuing the company’s continued operation,expanding scale,and obtaining more profits,some companies disregard market rules to conduct financial fraud,and various financial fraud methods have also begun to emerge one after another.As the fastest listed company in the world,Luckin Coffee has adopted a more radical strategy.Soon after its establishment,it began to invest a lot of money.The main role of these funds is to increase market share and enhance the public’s understanding and recognition of the brand..After Luckin was listed,in order to continue to raise funds,they chose to take huge risks to commit illegal acts,including but not limited to falsifying sales revenue,exaggerating related expenses and concealing the business of related parties,and finally made inflated profits22 The astonishing financial fraud of RMB 100 million has become one of the most influential financial fraud cases in 2020.This paper takes the financial fraud incident of Luckin Coffee as a research case.As a new type of retail industry under the rapid development of the Internet,the business model adopted by Luckin Coffee has been greatly changed compared with the previous traditional retail industry.Therefore,Luckin Coffee Fortunately,the means of financial fraud are different from those in the past,which are representative.At the same time,as a Chinese concept stock company listed overseas,fraud affects not only the company itself,but also other Chinese concept stock companies and even the image of my country.Therefore,the study of this case will not only serve as a reference for the corporate supervision of Chinese concept stocks and new retail industries,but also contribute to the further optimization of my country’s capital market.By using the literature research method and case study method,we deeply studied the whole process of the case,and conducted a detailed analysis of Luckin’s financial fraud.Then,the internal and external reasons of this case are analyzed relatively completely from three aspects: pressure,opportunity and excuse by using the fraud triangle theory.Finally,according to these three directions,some enlightenments on preventing the company’s financial fraud are put forward.This case has two labels: China concept stock and new retail industry.It is hoped that after analysis,it can provide a reference direction for preventing financial fraud of other companies and promote the healthy and steady development of the capital market.