Research On The Effect Of Corporate Performance Commitment On Financial Fraud

In order to stabilize the stock price,protect the interests of small and medium-sized investors,and boost the confidence of investors,in the process of share structure reform,additional stock issuance,asset purchase or other major asset reorganization of listed companies,the two sides of the transaction often make a special compensation clause,namely performance commitment,by which the rights and obligations of both sides of the transaction can be improved To a certain extent.In2015-2016,China’s capital market ushered in a peak of M & A,a large number of enterprises made performance commitments,and finally in 2018-2020,a large number of performance commitments expired.According to the data,between 2018 and 2020,the number of listed companies that make performance commitments but fail to meet the final standards has increased significantly,and financial fraud has occurred frequently.This phenomenon has aroused the attention of the capital market and all sectors of society on the relationship between performance commitments and financial fraud.The case company in this paper is Jiangsu yabaite Technology Co.,Ltd.(hereinafter referred to as yabaite).In 2015,the company went public through backdoor with Zoomlion electric,promising to realize net profits of RMB 255 million,RMB 361 million and RMB 476 million in 2015,2016 and 2017,respectively.If this goal is not achieved,the difference will be partially compensated by cash or shares.However,according to the data,although in 2015,Abbott achieved a net profit of 266 million yuan,meeting the performance commitment requirements;in 2016,Abbott only achieved a net profit of 241 million yuan,far from the performance commitment requirements.In 2017,Zhong Junhao,chairman of Shanghai Yaze new roof system Co.,Ltd.(hereinafter referred to as Shanghai Yaze),one of yabaite’s competitors in the same industry,reported the financial fraud of yabaite under his real name,causing a sensation in the capital market.In April 2017,China Securities Regulatory Commission filed a case to investigate the illegal information disclosure of Abbott.Eight months later,the CSRC announced that due to the fraud of Abbott’s finance,it will be fined 600000 yuan,and Lu Yong,the person in charge who is directly responsible for the fraud,will be fined 300000 yuan,and the lifelong market access ban measures will be taken,and other relevant responsible personnel will be given administrative penalties or market access ban measures according to law.In this case,due to the large amount involved in yabaite case,the problem of financial fraud is prominent,and the performance commitment made by the company during the merger and listing has a direct impact on the financial fraud in the later stage,therefore,this case has become an important case for studying performance commitment and financial fraud in the capital market in recent years,with a high degree of typicality.In this paper,the author will first analyze the relationship between performance commitment and financial fraud risk,and explain and build the transmission mechanism between performance commitment and financial fraud risk according to the implementation stage of enterprise performance commitment.Then combined with the case of Abbott,this paper discusses the causes of financial fraud caused by performance commitment,the mechanism between performance commitment and financial fraud,and the whitewashing methods of financial fraud,and draws the corresponding conclusions.Finally,the paper summarizes the whole case,and puts forward some suggestions to deal with the financial fraud risk in the position of the firm and other stakeholders.