An Empirical Study Of External Supervision, IPO Features And IPO Financial Fraud Screening

As effective means of "misappropriating", IPO has been favored by many enterprises. Stock issuance approval system adopted in China, subjective factors of NDRC plays a significant impact in the review process, which provide opportunities for enterprises to implement IPO fraud. At the same time, the dependence of the prior audit leads to the investors cannot identify the IPO fraud in time, aggravating the loss of investors’ interests and creating a serious threat to the stable development of the securities market.Otherwise, registration system reform formally implement On March 1, 2016. Registration system centers on information disclosure, fully giving play to the role of market allocation of resources, and the focus of supervision transfer to the matter and afterwards dynamic regulation. Therefore, in order to achieve a smooth transition to the registration system, making full use of external supervision, IPO characteristics indicating role has strong practical significance and necessity.Based on accounting fraud motivation theory and supervision theory, the paper choose the IPO financial fraud companies in 1990-2014 as the research sample, verify the effective of the information failure recognition system in China capital market by constructing logistic model from some dimensions, such as external supervision, IPO features and so on. The results show that characteristics of external supervision are associated with IPO fraud, that is, main underwriters, audit tenure and legal supervision are negative correlation with the IPO financial fraud, but the negative media coverage is positive; IPO features, including market heat and stock return are negative correlation with the IPO financial fraud, meanwhile, IPO fraud companies prefer the super offering and expanding the issue scale. Corporate governance characteristics: the departure of the chairman and CEO duality are positive correlation with IPO financial fraud, but the VC and the proportion of tradable shares are negative. Finally, according to the empirical results, the paper put forward the countermeasures to safeguard the legitimate interests of investors and the order of stock market.