Case Study Of Financial Fraud Of SELEN SCIENCE & TECHNOLOGY Based On GONE Theory

As China’s economic development has entered a new normal,high quality has become a key word in the development of the capital market.However,in the fierce market competition environment,in order to maintain business performance or pursue higher economic interests,listed companies may choose financial fraud to achieve the purpose,so effective governance and prevention of financial fraud of listed companies is particularly important.Therefore,it is of great practical significance to study the motivation,means and prevention of financial fraud of listed companies.SELEN SCIENCE and TECHNOLOGY,as a leading enterprise of new chemical raw materials,has been performing well since its listing,attracting the attention of the market.However,it has developed to the point of operating loss for fraud,which surprised the majority of investors.In addition,in 2019,in the face of the investigation of China Securities Regulatory Commission,Yinchuan state-owned capital entered the market,which became a typical case of local state-owned capital participating in the rescue of listed companies and finally obtaining their control.Therefore,this paper selects the new fiber technology as the research object.In this paper,the GONE theory is used to analyze the causes of fraud in SELEN SCIENCE and TECHNOLOGY from the perspectives of greed,opportunity,need and exposure.The causes of financial fraud in SELEN SCIENCE and TECHNOLOGY include: the insider trading of senior executives for profit,the frequent reduction and pledge of major shareholders for cash,and the greed factor constituted by the low professional ethics of the management;The opportunity factors of unreasonable ownership structure,internal control defects,the concealment of related party transactions and the inherent information asymmetry of capital market;The need factors are the need to improve the liquidity of funds,the need to meet the frequent transformation and excessive expansion of enterprises and the need to avoid delisting of operating losses.Fraud means hidden is not easy to be found and fraud risk low impact of small composition of exposure factors.Four factors in the common role led to the implementation of SELEN SCIENCE and TECHNOLOGY financial fraud.The reason in view of the fraud in SELEN SCIENCE and TECHNOLOGY,and puts forward some corresponding related fraud prevention advice: for greed factor is put forward to control the management and the greed of big shareholders demand,including establishing effective executive restriction and incentive mechanism,with big shareholders equity monitoring mechanism and strengthen the professional ethics and legal education executive measures;According to the opportunity factor,we should reduce the chance of fraud,including optimizing the structure of equity distribution,perfecting the internal control and improving the mechanism of independent directors.According to the demand factor,it is suggested to restrain the demand motivation of fraud,including expanding the financing channels of private listed enterprises,formulating reasonable enterprise development strategy,and regularly evaluating the implementation of enterprise strategy.In view of the exposure factors,it is suggested to increase the possibility of exposure,including improving the early warning mechanism of corporate financial fraud and strengthening the supervision of violations by supervision departments.It is hoped that the research of this paper can provide some reference for China’s private listed companies,supervision institutions and related personnel.