Listed Companies’ Financial Fraud Case Analysis

Financial statements are not only the way of the listing Corporation to show their performance, but also necessary reference for the vast number of investors to make investment decisions. Excellent operating performance indicates that the company has good prospects, of course it become the object of many investors pursued. For well-run, the development of promising companies, good operating performance can attract more funds to provide strong financial support for the company’s development and enhance competitiveness. But for companies that have bad performance, it will lose attractiveness Therefore, in order to attract the attention of the funds and investors, financial fraud has become common means of listed companies.It’s highly significant for the fairness and reliability of a listed company’s financial infor mation to have four factors, including standardized corporate governance structure, objective f inancial reporting system, perfect internal control mechanism and effective external control m ode. Except the traditional fraud measures, such as inflating assets and income, a new fraud w ay of related-party transaction is emerging and grows to the mainstream. Financial fraud has t he features of illegality, concealment, affecting broad, harmfulness. As one of the fraud means , foreign exports has already done much research on financial fraud mainly focusing on motiv ation theory. Motivation theory consists of four branch theories, comprising of iceberg theory, fraud triangle theory, GONE theory, risk factor theory, which constitutes the foundation of fin ancial fraud analysis.This paper takes the ZiXin Pharmaceutical Company as example.Firstly it introduces the background and the fraud of the company’s passing and processing results. Next,it identifies signs of fraud through the abnormal related transaction, profit index change tendency anomaly, the highly concentrated ownership. Then it analyses the four aspects of fraud means by illegal related transactions, inflated land use rights, inflated inventory, and inflated profits. Later, the article uses the traditional fraud triangle theory, pressure, excuse, opportunities as the framework of analysis, from the two aspects of internal factors and external factors to analyze the fraud motivation of ZiXin Pharmaceutical Company as well as learning from the other fraud theory,and citing the utility analysis model in economics. Based on the analysis of ZiXin Pharmaceutical Company’s financial fraud, we put forward four proposals to regulate the capital market and listing Corporation.