Research On Listed Companies’ Financial Fraud Means And Recognition

The capital market is the effective place of rational allocation of resources, the efficiency of the capital market determines the efficiency of the allocation of resources, and the efficiency of capital markets depends largely on the quality of the information received by the market, especially the quality of financial information. But the development of the securities market has been accompanied by the listed companies’financial fraud, which is just like a malignant tumor and even become a common problem among the listed companies, such as the recent case of WANFUSHENGKE fraudulent listing which led Ping An Securities Company Limited into the hardest hit of administrative punishment. Financial fraud not only ruin the listed companies, but also inflict serious damage upon the resource allocation mechanism of capital market, the interests of investors, especially the vital interests of the small and medium investors and their confidence in capital market. Even so, there is still an endless stream of conducting financial fraud, the company did not draw a lesson from the hazards it brought about, so the interests of many investors is still being constantly violated. In fact, the financial fraud of listed companies has been a threat to the development of capital markets, even indirectly caused an important impact on the socio-economic development. At present, the study of domestic and foreign scholars on listed companies’financial fraud has accumulated a wealth of results, the study involves the causes, signs, identification and prevention of financial reporting fraud and many other aspects. Under the above background, on the basis of reviewing and summarizing the existing research literature, this paper screened samples from the listed companies punished by China Securities Regulatory Commission during the period from January1,2001to December31,2011as fraud cases, using theoretical analysis, statistical analysis and case studies to study the methods and identification of financial fraud of listed companies in China. Finally, this paper put forward policy recommendations which aim at protecting the interests of investors:increasing penalties for financial fraud company and personnel, increasing the enforcement of administrative punishment, increasing the enforcement of audit fraud penalties and establish civil liability compensation mechanism, avoiding too much emphasis on profit targets when setting equity financing qualifications, the conditions of suspension or termination of listing or assessing executives of listed companies, gradually improving the corporate bond market to broaden the financing channels, establishing standard and efficient corporate governance structure, strengthening enterprise internal control.