Research On The Motivation And Prevention Of Financial Fraud In JY Company Based On Risk Factor Theory

Financial fraud occurs frequently in domestic and foreign capital markets.Repeated financial fraud has caused great harm to the capital market.From 2015 to 2019,dozens of companies were punished by the Securities and Futures Commission each year for financial fraud.Although the punished companies accounted for a small proportion of listed companies,they still caused great harm to the capital market.Therefore,it is of great significance to find out the causes of financial fraud in listed companies,analyze the means of financial fraud in listed companies,and put forward prevention strategies based on the causes of fraud.Based on a review of relevant domestic and foreign literature,this article introduces the concepts of financial fraud and the risk factor theory,and explains the reason for using the risk factor theory as a case study in this article.Next,a detailed study of JY's financial fraud cases was conducted.The company used fictitious overseas engineering projects,fictitious construction materials export trade and domestic construction materials projects to conduct transnational financial fraud,becoming the first punished cross-border financial fraud case in China.Based on the case analysis,the risk factor theory is used as the theoretical framework,and the reasons of JY's financial malpractices are analyzed from five perspectives: morality,motivation,opportunity,exposure possibility,and punishment of exposure.The causes of JY's financial fraud are mainly: Lack of moral pursuit of personnel;fulfillment of performance commitments,financing needs,enjoyment of cross-border tax policy preferences;excessive concentration of equity,failure of internal governance mechanisms;cross-border supervision difficulties,failure of due diligence in external audits,inadequate market supervision mechanisms,and low fraud costs.Finally,from the perspective of the five motivations mentioned above,the financial fraud prevention strategy is proposed in order to have a certain enlightening effect on listed companies and investors in the capital market.