| As the important part of Chinese market economy, stock market promotes the economic development. However, with the growing number of Chinese Listed Companies, the financial reporting fraud is getting worse. Not only make the investors suffered huge losses, hit their confidence, but also trample on the fair, impartial and public principles of stock market, hindered the healthy development of Chinese economy. Many scholars research accounting fraud from the motivation, methods, hazards etc. Also the study established a variety of identification model to help organizations identify fraud. In the research of the causes, it also applied to the game theory, but the ‘completely irrational’ assumption is difficult to achieve in the real life. So the paper is based on the Evolutionary Game Theory which assume the participants is ‘bounded rationality’, built the evolutionary games model between the listed companies and stakeholders which included accounting firm, SFC, investor. After adjusted the factor, we can observed the changes of the evolutionary path, summed up the reason of the listed companies’ financial reporting fraud.Firstly, this paper extracted the research result and methods used about the cause of financial reporting fraud which lay the foundation for the writing of this article. Then we counted the Chinese financial reporting fraud case which happened from 2007 to 2015, found five current characteristics included the fraud industry, the number of change, the money, the means and the consequences of fraud. Next, the study constructed both evolutionary game models, the one is a model between the listed companies and accounting firms, the other one is a model among the listed companies and the Commission, the investors. Afterward use the MATLAB for numerical simulation. Based on the theoretical models, we verified the correctness of the model by the Hebei BaoShuo fraud case. After verification, we combined with the specific circumstances of the regulatory environment in China, summarized the causes of the financial reports of listed companies fraud. Finally, the paper proposed four aspects to prevent financial reporting fraud of the listed companies. |
