A Study Of Financial Fraud Of Fushun Special Steel Co.,Ltd Based On The Perspective Of Corporate Governance

The phenomenon of financial fraud of listed companies seriously destroys the order of the securities market.Therefore,it is urgent to prevent and control the financial fraud of listed companies.This paper focuses on the relationship between corporate governance and financial fraud.How to prevent the financial fraud of listed companies based on the perspective of corporate governance? In order to solve the above problems,this paper studies the case of Fushun Special Steel Co.,Ltd with the corporate governance theory.Based on perspective of the company’s external governance and internal governance,this paper discusses the causes of financial fraud of listed companies and advances the corresponding preventive measures.This paper finds that the causes of financial fraud for Fushun Special Steel Co.,Ltd are come from external and internal base on the perspective of corporate governance.The problems in external governance include :(1)imperfect laws and regulations lead to low cost of financial fraud;(2)insufficient supervision to deter financial fraud;(3)the accounting firm does not play an effective external supervision role;(4)the iron and steel industry is facing serious difficulties,and vicious competition causes huge operating pressure.The problems of internal governance include :(1)the equity structure is seriously unbalanced,the problem of "one share dominant" is so serious,the proportion of state-owned shares is too high,the separation of two rights is too high,the shareholding ratio of institutional investors and senior executives is too low;(2)the participation of shareholders’ meeting of small and medium shareholders is low;(3)the unreasonable membership structure of the board of directors and ineffective supervision by independent directors lead to the board of directors lacks of independence;(4)the unreasonable structure of the members of the board of supervisors and inadequate performance of their duties lead to ineffective supervision of the board of supervisors;(5)core executives’ moral decline and weak legal consciousness lead the way in breaking the law.The defects in the external and internal governance structure of Fushun Special Steel Co.,Ltd are the key factors that lead to its financial fraud.This paper shows that the external governance structure of the company can be improved by improving laws and regulations,strengthening supervision,strengthening the management of external audit institutions,creating a good industry development environment and strengthening the supervision role of the society and the media.The internal governance structure of the company can be improved by improving the shareholding structure,enhancing the participation of small and medium-sized shareholders in the general meeting of shareholders,safeguarding the independence of the board of directors,improving the selection mechanism of members of the board of supervisors,improving the selection and appointment mechanism of senior executives and enhancing the supervisory role of party organizations.By improving the external governance and internal governance structure of the company,the governance level of the listed company can be effectively improved,so as to prevent financial fraud in the level of corporate governance.