A Comparative Study On Accounting Fraud Behavior Of Mainland And Taiwan Listed Companies

Financial statement fraud is the most common one. Frequent frauds of financial statement of Chinese listed companies affect benign operations of security market and undermine the investors’ confidence. Despite similarities in culture, custom, law between Mainland China and Taiwan, the fraud cases of financial statement in Taiwan is significantly less than that of Mainland China. Through comparisons and analyses of characteristics of general meeting of shareholders, board of directors, board of supervisors, external audit between listed companies in Mainland China and Taiwan, the paper aims to provide evidence and suggestions for further research of financial statement fraud in Mainland China. After thorough analysis of fraud companies, it is sure that the comparison between fraud companies in Mainland China and Taiwan is feasible.Selecting 19 variables comprehensively including variables of general meeting of shareholders, board of directors, board of supervisors, comprehensive collection external audit and collects sample data and corresponding matched data of listed companies in Mainland China and Taiwan, especially collection a list of Mainland China financial statement fraud. It matches sample data of 87 listed companies in Mainland China from the year 2005-2011 and matches sample data of 47 listed companies in Taiwan at same period. Variance analysis and logistic regression analysis are based on the software SPSS and comparatively accurate results are obtained.There are few literatures on the financial statements fraud between mainland and Taiwan.There is no specific empirical research on the literature.This article makes an empirical study on the financial statements fraud of the mainland and Taiwan comprehensively.The results are below. For listed companies in Mainland China, the size of board of directors and the audit opinion are both significantly related to their fraud behavior of financial reports. For listed companies in Taiwan, the size of board of directors, the size of board of supervisors, the size of account firms, consistency of audit opinion are significantly related to their fraud behavior of financial reports. Generally, companies of Taiwan precede that of Mainland China in terms of board of directors, board of supervisors and external audit. Several proposals and measures are put forward for companies of Mainland China, such as increasing the meeting attendance of shareholders by means of information technology, improving related financial laws and legislation, deepening reform of accounting firms.