A Study On Financial Information Fraud Risk Warning For Manufacturing Industry Listed Companies Of China

With the dramatic changes in the global financial environment, the riskassessment and control has become the two large important themes for financialinstitutions. In recent years, listing Corporation financial fraud problems becomeintensified, while manufacturing listing Corporation, as the largest number of listed andlargest scale industry, a typical representative of the real economy and China’s A share market main army, has a lot of financial fraud and occupied a large proportion in financial fraud company,which cause state-owned assets lost.Therefore, it is necessaryto design and establish an objective, scientific financial information fraud warningmodel to prevent manufacturing listing Corporation financial fraud. The reform ofaccounting standards in2007made the clear reform for the basic principles ofaccounting report and the three financial report (asset statement,profit statement andcash flow statement).so that our accounting standards and international accountingstandards more convergence. The new standards require the financial report more real,fully reflect the enterprise’s financial condition and operating results, need disclosurethe detail information, strengthen the management responsibility, require enterprises toimprove the internal management, make the management decision optimized.the reformprovide a favorable external environment to prevent financial fraud.Therefore, this paper draws on the research results of home and abroad,using thefinancial variables, the corporate governance variables and cash flow variables toestablish financial information fraud risk warning model for manufacturing listingCorporation of China.we collected the year from2002to2012samples,which punishedby the China Securities Regulatory Commission, the shanghai Stock Exchange, theshenzhen Stock Exchange,the Ministry of Finance and other institutions, totally126fraud samples and252normal samples.the reform of accounting standards as a dummyvariable into the model, which is helpful to improve the prediction rate of fraud. Wethrough Hausman test method to build logit panel data fixed effect regression for ourcountry manufacturing industry listing Corporation financial fraud risk warning model.Finally, the empirical results of the accuracy of prediction of normal company is83.63%, the predictive accuracy of fraud company of68.86%, the total prediction rate is77.11%, has certain predictability.The characteristics of this paper as follow: the first is combined the financial variables, the corporate governance variables and cash flow variables as explanatoryvariables to study whether the company has financial fraud. most of domestic scholarschose the traditional financial indicators as explanatory variables,which reflect only asmall part of the company, can not fully reflect the company’s situation, so in this paper,we adding the corporate governance variables to reflect the financial condition of thecompany. the second is to join the dummy variables that Reform of accountingstandards in2007, to observe the changes to the financial situation of enterprise beforeand after the reform.The third is the use of panel data in logit regression model topredict, most of the domestic scholars established and predicted model with the datasection to study fraud, but section data can not reflect the dynamic changes of thecompany’s development. This paper choose11years financial data among2002-2012ofmanufacturing industry of listing Corporation in China, at the same time panel datacombine the time dimension and the section dimension to analysis, which greatlyincreases the sample data, but also can reflect the dynamic operation of the company,and the prediction results have very strong practicability.The content of this paper is divided into the following sections: the first chapterincluding the research background and significance,research ideas,methods andinnovations, research content and overall structure;the second chapter review of theresearch literature of home and abroad;the third chapter is manufacturing industryfinancial information fraud theory and risk theory, including the definition andrepresentation of financial fraud, theory of financial fraud and risk warning theory; thefourth chapter is the establishment of financial fraud risk warning model, includingsample selection,research of the correlation of the main financial variables, thecorporate governance variables and the cash flow variable indicators.using the currentratio, asset liability ratio, total asset growth rate, rate of return on total assets, theretained earnings ratio, total asset turnover ratio and financial expense ratio sevenfinancial index, an index of corporate governance board of directors hold sharesproportion and the last operating cash flow ratio of cash flow index as the variables andthe design of financial fraud warning model; the fifth chapter empirical analysisincluding cross analysis, descriptive statistics of variables, Hausman test and fraudprediction rate; the sixth chapter is the conclusion and the limitations and prospects.