Research On Financial Fraud Of Listed Companies Based On Gone Theory

With the improvement of China’s economic level,various economic policies have led to a better economic environment,spawning many new industries and stimulating the development of the capital market.People are more involved in investment and financing activities.However,accompanied by the increasing complexity of the capital market,frauds emerge in an endless stream,and the means are gradually upgraded,from the initial fraud of individual subjects to the joint fraud of multiple subjects and multiple parties,which has brought harm to the capital market and investors.It is particularly important to explore the underlying causes of fraud of listed companies.Domestic and foreign scholars have studied the fraud motivation of listed companies for a long time,and GONE theory is one of the most widely used theories.After two years of development,the theory has been quite comprehensive,can guide the analysis of the company from abnormal behavior and motivation before fraud,to fraud in the need to create false financial indicators and other interests of the fraudster,and then to fraud to cover up the facts and face punishment considerations,covering the whole process of fraud.Under the GONE theoretical framework of previous studies,this paper selects Eastern Gold Jade as a fraud case for research.Firstly,it introduces the development process of Eastern Gold Jade,the business development after backdoor listing and the shareholding structure before delisting.It analyzes that the financial difficulties during the fraud period are caused by the overstocking of inventories,high debts and poor management.It reviews the punishment process and results of the CSRC,and summarizes the main means of fraud.Next is the exploration of the causes of fraud.Eastern Gold Jade’s fraud is first of all due to the greed of the management,and has used the company as a tool for earning money many times.Secondly,the management also has the highest proportion of equity,and other people cannot control the company’s decision-making.There are major defects in the after-loan management of subsidiaries,the debt and inventory management of companies and internal audit.The particularity of industrial transactions and the difficulty in estimating the value of jade provide opportunities for fraud.Again,is due to the management on the one hand need to maintain the leading position of the industry,on the one hand need to show the company’s outstanding financial indicators,on the other hand need to use the company and related parties to obtain high returns;finally,because the means of fraud are complex,the audit institutions may have conspiracy fraud or limited audit scope,and the supervision of the CSRC is lagging behind.There are few channels for external investors to obtain information,and it is difficult to form effective supervision.The probability of fraud being exposed is small,and even the cost to be found is much smaller than the income.In view of the above fraud motivation,put forward the following suggestions:First of all,for the management,to use social credit system constraints,and improve their moral consciousness.Secondly,in terms of the internal aspect of the company,avoid the "one-word" equity control,strengthen the internal supervision function of the company,and improve the internal management.Then,in order to reduce the adverse needs of enterprises,the company should focus on the future,not be tempted by short-term interests,and open vision to seek new financing channels,China’s backdoor listing and delisting mechanism should also be more reasonable,give the company development opportunities,while strictly preventing the company from fraud.Finally,to strengthen external supervision,audit institutions strictly abide by professional ethics,government regulation to improve punishment,departments to work together to investigate fraud,external investors learn more professional knowledge,the media as a supplement to speak for public opinion.It is expected that the above analysis and recommendations can provide effective reference for the development of the company,the decision-making of investors and the work of supervisors to jointly prevent fraud and achieve common interests.