The Power Of Major Shareholders,the Embezzlement Of Interests And Internal Control Risks

Economic progress has promoted the rapid development of my country’s capital market,and more than 3,000 listed companies have stepped onto the capital stage.However,under the booming development,financial frauds have occurred frequently,which has severely affected all capital market entities.The shareholding structure of listed companies in my country is generally too concentrated,which is very likely to cause problems such as failure of internal control and interest encroachment,which will lead to financial fraud incidents.As a high-tech material company,Kangdexin has grown to a market value of nearly 100 billion in just seven years.After that,major shareholders manipulated a huge amount of tens of billions of fraud and led to delisting,and the lessons were profound.Kangde Xin Investment Group,as the controlling shareholder of Kangde Xin,used the power of major shareholders to invade Kangde Xin’s interests in order to meet its own capital needs.This process concurrently led to the failure of internal control and the interests of small and medium shareholders suffered damages,in order to maintain Kangde Xin in the capital market.The performance of Kangde Xin’s actual controller Zhong Yu and his management have implemented financial fraud.In this process,the intermediary agencies failed to diligently perform their duties to provide opportunities for fraud and increase the difficulty of discovery.The incompleteness of the capital market has also weakened the financial The deterrence that fraud should have has caused huge losses to the majority of investors and has a bad impact on the capital market.Kangde Xin’s fraudulent amount is large and influential.It is a typical epitome of numerous fraud incidents in the capital market.This article has certain theoretical and practical significance for the study of Kangde Xin’s fraud cases.This article uses case study method,literature analysis method and financial index analysis,combined with the research results and theories of major shareholder control,interest encroachment and financial fraud,to study the influence of major shareholder power on the financial fraud behavior of listed companies.First,introduce the background of Kangde Xin’s fraud cases,sort out the process and consequences of Kangde Xin’s financial fraud;secondly,identify its fraud from the perspective of financial and operating information,and use the characteristics of financial and major shareholders to identify its false performance;and analyze the fraud in depth again Means and causes,explore the transmission mechanism of financial fraud caused by the control of major shareholders;finally,combine the causes of Kangde Xin’s financial fraud to propose countermeasures to prevent financial fraud of listed companies.The analysis of Kangde’s new counterfeit chain transmission mechanism found that its controlling shareholder’s dominance and the tight capital chain became the chain source factor,which led to the encroachment of interests and the failure of internal control,and then led to financial fraud.At the same time,insufficient external supervision provided it with opportunities for fraud.The imperfect capital market has further weakened the deterrent against counterfeiting.my country’s listed companies generally have a relatively concentrated shareholding structure.The Kangde Xin fraud case has provided us with corresponding lessons and experience.This article puts forward the following suggestions for preventing listed companies’ financial fraud.One is to strengthen the power control of major shareholders and strengthen the internal of listed companies.Control construction,reduce the risk of manipulation by major shareholders,and prevent the encroachment of major shareholders’ interests;second,strengthen the supervision of auditing and other intermediary agencies,and enhance their independence;third,enhance the deterrence of the capital market,increase the cost of violations,and improve the level of investor protection.Through these countermeasures,we hope to reduce the financial fraud incidents of listed companies,regulate the financial behavior of listed companies,and help the healthy development of the capital market.