Motivation And Enlightenment Of Financial Fraud Of Luckin Coffee

In recent years,with the increasing number of public companies,the occurrence of financial fraud is more and more frequent.The nature of financial fraud is bad,causing great harm and far-reaching impact.It will not only disrupt the market order,bring huge economic losses to investors,but also send a vicious signal to the outside world that the enterprise and the country are dishonest,but also affect the reputation of the whole country.Luckin Coffee was listed on NASDAQ in May 2019.In February 2020,it was revealed that Luckin Coffee had financial fraud.In early April,Luckin Coffee admitted that it had a false income of 2.2 billion yuan.The scandal broke out less than a year after it was listed.This event caused a sensation in the capital market.After Kangdexin and Kangmei pharmaceutical,the whole society was again concerned about financial fraud.The scale,means and consequences of the fraud are representative.In this case,we choose Luckin Coffee as a case,through the analysis of the characteristics and problems of its business model,to further reveal the internal causes of its fraud,so as to draw inspiration from many aspects,sum up the experience and lessons,targeted to prevent and combat financial fraud,and help the healthy and orderly development of the securities market.First of all,starting from the research status at home and abroad,this paper briefly introduces the current research on financial fraud and business model,including the motivation,means and governance of financial fraud,as well as the relationship between financial fraud and business model.Secondly,this paper introduces the relevant concepts and theoretical basis of financial fraud,including the meaning of financial fraud,the meaning of business model and so on.The theoretical basis is mainly about the three theories of financial fraud: fraud triangle theory,GONE theory and fraud risk factor theory.Then,this paper makes a brief introduction to the case enterprise Luckin Coffee,reviews the fraud of Luckin Coffee,and analyzes the business model of Luckin Coffee,and summarizes the characteristics and defects of the business model.The defects include low viscosity of users,lack of attention to product development,rapid expansion of stores and risks in personnel management.On this basis,combined with the fraud triangle theory,the paper analyzes the fraud causes under the defects of the model from three aspects: pressure,opportunity and excuse.The pressure factors include subsidy mode leading to financing pressure,ignoring product research and development leading to market competition pressure;The opportunity factors include failure of internal control,poor supervision caused by misguidance of business model,inadequate audit due to new retail model,and insufficient punishment for fraud;The reasons for the excuse are that the lack of management morality led by Lu Zhengyao rationalizes the fraud.At the same time,the paper summarizes the means of financial fraud of Luckin Coffee,which mainly includes fictitious sales volume and exaggerating unit price to increase the sales revenue;exaggerating advertising expenses and increasing cost;the related transactions with enterprises and old classmates of Shenzhou Department conceal the truth.Finally,based on the analysis of the reasons and means of Luckin Coffee’s fraud,this paper draws some suggestions from three aspects: listed companies,audit institutions and regulatory agencies,and helps the capital market prevent financial fraud.From the perspective of listed companies,the company should formulate sustainable business model,improve the internal control system of the company and improve the professional ethics of senior executives;From the perspective of audit institutions,we should conduct field investigation,pay attention to the analysis of business model of the company,increase the understanding of the whole industry and increase the application of big data technology;From the perspective of regulatory agencies,relevant legal systems should be formulated and perfected,punishment should be strengthened,social supervision and cross-border supervision cooperation should be strengthened.