The Economic Consequences And Supervision Mechanism Of Financial Fraud In Chinese Stock Market

The financial reports are one of the most important information,which are the important basis for regulators,investors and stakeholders to make decisions.However,from some supergiant corporation's accounting scandal,like Enron,the financial frauds happened more frequently.It seriously undermined the market confidence of investors,raised investors' concerns,also caused institutions and scholars to pay attention.Many scholars do empirical researchs on the economic consequences caused by financial fraud in different markets,and get similar results.But there are few researches in Chinese market.In addition,the academic circles has not conclusion on different types of market supervision mechanism's constraints on financial fraudulent behavior.It may be due to the different breakthrough points,different research methods or different supervision mechanisms in different countries.Based on the analysis of the background and literature,we define and classify the financial fraud of listed company in Chinese market.Then we study the economic consequences of financial fraud of listed companies.Besides,we in-depthly study on the existing Chinese restriction supervision mechanism to financial fraud behaviors and different types of these behaviors.First of all,we give the definition of financial fraud of listed companies.That is,listed companies use false information disclosure,misleading statements or material related transactions,intentional misrepresentation or omission of important matters,we call these behaviors financial fraud.At the same time,this paper divides the financial fraud into two categories.Secondly,from market investors and the company two aspects,this paper studies the financial consequences of the financial fraud to market investors and the future management of the company.This paper based on the punished listed companies by supervision department due to the fraudulent financial statements.Besides,this paper also analyses the differences in the reaction of the market to measure the economic consequences.At the same time,this paper uses the least squares method to measure the financial impact.What's more,this paper use the reaction to quantize the impact of listed companies' financial fraud on the company's future economic consequences.Next,this paper investigates in the constraint effect of the existing supervision system of the listed company's financial fraud in the Chinese market.These supervision system are consisted of the internal supervision and external supervision two aspects.In addition,this paper further explores whether different supervision mechanisms have different effects on different types of financial fraud.Finally,this paper points out the inadequacies of the study and gives the future research prospects.