Research On The Causes Of Financial Fraud Of Kangde Xin And Countermeasures Based On GONE Theory

As a listed company with wide influence in the capital market,Kangde Xin’s financial fraud has caused negative impact on a wide range of social levels;although it has been delisted,its R&D and sales capacity in the polymer materials market is still at the forefront of the industry,and it is only by clarifying the motive of fraud that its fraud can be effectively prevented again;it can also reverse the gap or the loophole of checks and balances in China’s capital market regulators and improve the overall It can also make up for the loopholes in the regulatory authorities of China’s capital market,improve the overall level of supervision,and help upgrade supervision.Therefore,it is of practical significance to study the causes of financial fraud of Kangde Xin in this paper.This paper follows the logic of analyzing the causes of problems and solving them scientifically,and takes the financial fraud case of Kangde Xin as the object of study.On this basis,the four factors in GONE theory are divided into two aspects of fraud perpetrators and fraud organizational environment,which are applied in the analysis of fraud motives of Kangde Xin,and the following conclusions are obtained:The greed motive of the perpetrators of financial fraud is mainly manifested as follows: Kangde Xin’s own blind expansion and pursuit of profit as well as the profit grabbing by the major shareholders;the aggressive pace of the company’s development with the intention of obtaining more profit through rapid expansion;the major shareholders,out of their excessive desire for expansion,persistently pledged a very high proportion of Kangde Xin’s shares(some of the shares held in the year are restricted shares)to cash in the capital market,infringing on the interests of the general investors.The motives of the perpetrators of financial fraud are as follows:Kangde Xin,major shareholders and management committed fraud to support and maintain the share price out of their own interests;Kangde Xin committed fraud to avoid "ST" and maintain its listing status;Kangde Xin committed fraud to attract investment or debt financing in the capital market to make up for the huge capital shortfall needed for development.Fraud.The motivation of the organizational environment for financial fraud is: the concentration of equity in Kangde Xin,the lack of checks and balances on the major shareholders,especially the controlling shareholders,and the large infringement effect;the governance structure is more formal than substantive and there are deficiencies in internal control,which facilitates the occurrence of fraudulent behavior.From the perspective of the motivation of financial fraud exposure in the organizational environment,the majority shareholders use their control power to unite with senior management and collude with related institutions to form interest groups,resulting in high fraud concealment;firms and financial institutions that do not exercise due diligence,resulting in less exposure of fraud from the outside.Based on the analysis of the motive factors,this paper proposes targeted measures to prevent the recurrence of financial fraud in Kangde Xin: from the level of fraud perpetrators,it is necessary to strengthen the integrity construction and legal responsibility awareness of Kangde Xin’s management and major shareholders to curb their greed;it is necessary to take its own development as the starting point,make prudent scale and capital planning,form reasonable capital needs,and discard inappropriate needs.From the perspective of the organizational environment of fraudulent behavior,Kangde Xin should improve its internal governance structure and strengthen internal control to reduce the opportunity of fraud;externally,it can introduce a new professional service organization cooperation model and strengthen the external fraud detection mechanism to improve the chance of exposure,increase the punishment and enhance the exposure penalty.Only when the expected cost of fraud is higher than the expected benefit of fraud,i.e.,the behavior is "more than worth it",the profit-seeking nature of capital will naturally curb the occurrence of financial fraud.The research on the causes and countermeasures of financial fraud completed in this paper will provide measures to prevent the recurrence of financial fraud in the future of Kangde Xin,and also provide reference for other listed companies to prevent financial fraud.