Empirical Study Of The Relations Between Internal Governance Structure Of Listed Companies And Financial Fraud

Financial fraud is the enterprise management or inflated asset management layer byfabricating false financial and accounting reports, or profit, thus misleading information is theuser’s decision. With the continuous development of economy, financial reporting fraud bothin terms of scale and the emergence of more and more frequent violations amount. In highlydeveloped economy, both the capitalist system of western countries and China’s socialistsystem, financial fraud, all had the significant influence to today’s economic development.From Joan MinYuan enron in the United States to China, the essence of the trust, financialfraud exposure time and time again time challenged people sensitive nerve.Implementation of enterprise financial fraud not only harm the company, shareholders,creditors, employees and the government, the interests of relevant interest groups, at the sametime also disturb the order of the capital market, development have a negative impact on theeconomy. This article from the perspective of the internal governance structure of listedcompanies in China, this article on the governance structure of listed companies and to studythe relationship between financial reporting fraud, to prevent the happening of financialreporting fraud and improve the quality of financial reporting. In this paper, the researchfollows the the thinking of combining normative research and empirical research, in thenormative research part, first of all to the meaning of corporate governance and corporategovernance structure in our country related theory are analyzed; Second for financialreporting fraud of listed companies, including the meaning of fraud and related theories areanalyzed; the root cause of the fraud Finally from the aspects of internal governance structureof weakening. In the analysis of the ownership structure, board characteristics, characteristicsof the board of supervisors, and focus on the relationship of financial reporting fraud, such asthe size of the board of directors, the proportion of independent directors, and so on, and thecause, the essay discusses the underlying causes of financial fraud.The empirical research part, focuses on the study of internal governance structure oflisted companies and the relationship between the financial fraud. This article selects since2003by the China securities regulatory commission30fraud of listed company of thepunishment,30samples for fraud, and selected30industries, the same of similar assets not fraud company control samples. And build a Logistics model. Model to whether fraud hasoccurred as the dependent variable, the ownership structure, board characteristics,characteristics of the board of supervisors company internal governance structure factors asindependent variables, including the proportion of state-owned shares, legal person shareproportion, the proportion of tradable shares, the first big shareholder ownership, board sizeand proportion of independent directors, the board size, etc. The empirical study shows thatthe financial fraud of listed company and the company ownership structure, board of directorsand the board of supervisors system feature correlation; Financial reporting fraud of listedcompany and the legal person share proportion and the proportion of independent directors oflisted companies has significant relationship, the proportion of state-owned shares and legalperson share proportion of fraud sample was obviously higher than that of the fraud company,while the proportion of tradable shares and the proportion of independent directors is lowerthan the fraud company; The board size reasonable cases, the larger, the more likely financialfraud of listed company; And its role should also further supervision of the supervisory board.Finally, based on the conclusion of the empirical analysis, this paper proposes tostrengthen and improve the internal governance structure of listed companies. Includingreducing state-owned shares, the change of state-owned shareholders “a dominant”phenomenon, restrict controlling shareholder’s voting rights, improve the system ofindependent directors and the board of directors established under several professionalcommittee, improve the system of independent supervisors to perfect the board of directors ofthe listed company’s ownership structure, such as features and characteristics of the board ofsupervisors.