Listed Companies' Financial Fraud Legal Regulation

The wide spread of financial fraud all over the world not only causes huge losses to investors and creditors but also makes the public lose confidence on securities market. This paper takes the America's Enron and World.com scandal as a prefix, then analyzes the causes of this issue both in America and China, the solutions to it as well. This paper consists of four chapters. The first chapter overviews the material contents of two acts ----- Sarbanes—Oxley Act of 2002 which was passed by American congress and was signed by American president into law on 30 July 2002. the other is the Listed Company's Governance New Rules issued by NYSE's Corporate Accountability and Listing Standards Committee. As is well know, at present, American's securities market's monitoring system is the most mature and advanced, Some newest research achievement on financial fraud must be reflected in the two acts. Through brief introduction, I hope it can bring some new ideas and thoughts for the legislator and monitor. The second chapter analyzes the causes of financial fraud in America. Some causes are the same as in china such as the defects in corporate governance. Some problems have not yet emerged in china but quite possibly emerge during the development of domestic's securities market in the near future, such as stock option excitation institution. Analyzing the financial fraud causes in America will help us a lot avoid those expensive prices. The third chapter analyzes in details the financial fraud causes in the domestic's securities market. It consists of two parts, one is the analysis about motivation of financial fraud, that is to say, why managerial staff is willing to take so high risk to do it, the other is the analysis about the institutional defects related to this issue.Aimed to the causes of financial fraud above mentioned, the fourth chapter puts forward the solution to this issue.