Research On Financial Fraud Of Ultimate Controllers Under Corporate Governance Theory

In recent years,we pay great attention to capital market reform and innovation.At the 2018 Central Economic Work Conference,it was pointed out for the first time that "the capital market plays an influential role in the financial operation,and it is necessary to build a standardized,transparent,open,dynamic and resilient capital market through deepening reform".It clarifies the positioning and strategic significance of the new era capital market,and also points out the path of development of our capital market.In recent years,the construction of our capital market has made considerable achievements,but the road ahead is inevitably full of thorns.Behind the brilliant achievements,a series of events have inevitably occurred in the development process of our capital market that hinder the process of reform and development,among which the most important one is the financial fraud of listed companies.There are many reasons for the frequent fraud incidents.One of the important reasons is that in the Chinese capital market,the ultimate controller uses the equity pyramid structure to control enterprises,which brings a series of corporate governance problems.The endless financial fraud events damage not only the order of the capital market,but also investors’ investment confidence and enthusiasm.Therefore,how to effectively alleviate the governance problem brought by ultimate controller has become an urgent problem in the development of our capital market.This paper takes the financial fraud incident of Tongjitang as a case study to study the financial fraud of the ultimate controller of Tongjitang.Firstly,it introduces the general situation of financial fraud,and identifies the means and signs of financial fraud,and further analyzes the influence of financial fraud.Secondly,from the perspective of corporate governance,the fraud risk factor theory is used to analyze the moral character,fraud motivation,fraud opportunity,fraud detection possibility,fraud penalty degree and other related factors behind the ultimate controller financial fraud behavior of listed companies.Finally,according to the conclusion of the case analysis,targeted suggestions are put forward to strengthen the prevention and supervision of the ultimate controller’s financial fraud.From the perspective of the corporate governance structure,it is necessary to give full play to the governance role of institutional investors and optimize the governance structure of the board of directors.From the perspective of the internal governance mechanism,it is necessary to improve the internal control system of the enterprise and establish the reputation supervision and incentive mechanism.From the perspective of external governance mechanism,we should give full play to the governance role of intermediary institutions,strengthen the punishment of regulatory measures and further improve the securities class action system.