Research On The Financial Statement Fraud Of Listed Companies In China

Financial statement is an important basis for management and scientific decision-making. It is also an important source of information for macro-and micro-management of the national economy. As public goods, there are a large number of users, including government departments, creditors and investors. Because of the harmfulness of the false statement, we need to dig deeper into the factors that lead to fraud, that makes the regulators and stakeholders find the false statement easily and avoid losses causing by using the false statement.In this paper, we collected the data from 38 A shares companies in China which had been punished by the CSRC (China Securities Regulatory Commission) or the ministry of finance (2000-2010). Finally, we choose 82 annual reports for study. First, we analyzed the factors of the fraud such as "Pressure","Opportunity" and "excuse" on the base of "The Fraud Triangle Theory". Then, by doing descriptive analysis of the selected study sample, we found the year of fraud distribution and characteristics of the industry in which fraud company. We also found the irregular companies always realize some certain objectives by exaggerating revenues and assets, disguising the important issues, or underestimating liabilities and expenses. Then, this paper build a binary logistic regression model to constitute a fraud samples and control samples of total samples, and did the single factor analysis and binary logistic regression analysis respectively. Analysis showed that the stock market in China, listed companies financial reporting fraud occurs mainly from the pressure to avoid wearing hats or delisting. When a company is facing allotment/or face additional pressure to wear a hat, the high proportion of the largest shareholder to provide opportunities for the occurrence of fraud, while the higher proportion of independent directors and the moderate concentration of equity help to prevent fraud occurrence, size of the Board of Supervisors scale, the proportion of tradable shares, and the trial of accounting firms and other indicators of credit fraud and corporate financial reporting did not exist significant correlation.Through analysis on the characteristics of fraud and the empirical results, we will help the relevant regulatory authorities, auditors and investors to identify signs of fraud better, remain vigilant to discover the company's fraud.