Research On The Impact Of Managerial Participation In The Military On Corporate Financial Fraud

In the academic circles,the research on financial fraud has been focused on the relationship between corporate governance structure,board characteristics and institutional investors,However,there are few studies on the influence of individual characteristics on financial fraud.However,the theory of high-level ladder that the formulation of the company’s policy is not only affected by the internal and external environment of the company,but also by the manager’s personal characteristics.So this paper tries to apply the behavioral economics theory and upper echelons theory,based on the theory of behavioral economics attempts to study the relationship between managers’ military experience and financial fraud.In our country,the soldiers have the special status,their words and deeds have been attracted much attention.Therefore,in this paper,we select senior managers who has early—life military’s service as research object,this study uses listed companies involving financial fraud in the statement of punishment which announced by the SEC,Shanghai stock exchange and Shenzhen stock exchange from 2001 to2013 as research samples.Then use multiple linear regression method to test whether military experience has an effect on financial fraud.The writer find three conclusions:First,the effect of the managers’ military experience have positive effect on financial fraud,but not significantly.And the managers’ military experience can effectively reduce the possibility of application of illegal funds.Second,no matter in the state-owned enterprises or non state-owned enterprises,the influence of military experience on financial fraud is not significantly reduced.But in the state-owned enterprise Panel data model,military experience has also increased the possibility of financial fraud.Third,in a high degree of competition in the industry,there is a significantly negative correlation between managers’ experiences and financial fraud,accounting problems,illegal funds,This suggests that in highly competitive industries,the military experience has reduce the possibility of financial fraud,accounting problems and application of illegal funds.This paper enrich the research field about managerial characteristic on corporate financial fraud,and broadens the research perspective of financial fraud.This paper is based on "limited rationality" hypothesis,experience from the perspective of the managers’ military experience,research on financial fraud,combining behavioral economics,upper echelons theory and financial fraud,breaking the rational Hypothesis of Traditional Economics,and close to reality,and enrich the research field of enterprise financial fraud and behavioral economics.