Case Study Of Kangdexin’s Financial Fraud

In the past few decades,our country’s capital market has developed rapidly,and the domestic A-share market has occupied an important position in the world.However,in recent years,financial fraud scandals of listed companies have been continuously exposed like mushrooms after a rain.The occurrence of a financial fraud incident has a huge and far-reaching impact on the investment environment of the capital market.Therefore,the society should pay more attention to such incidents,and the awareness of prevention and control should be given top priority.Kangdexin Composites Group Co.,Ltd.used to be the "leader" of polymer materials and a white horse in the new material manufacturing industry.When the limelight was at its peak,it "will collapse" because it could not pay the debt of only 1 billion yuan overnight.It was finally found out that the company’s fictitious profit reached 11.9 billion yuan for four consecutive years.Therefore,to study such a case of financial fraud involving such a large amount and put forward corresponding governance suggestions will have a certain degree of reference significance for market investors,other listed companies,intermediaries and regulatory authorities.On the basis of previous studies on domestic enterprises’ related financial fraud cases,this paper takes the perspective of financial status and quality as the starting point,and establishes an analytical framework to study the causes and means of fraud.This case takes Kangdexin Composites Group Co.,Ltd.(hereinafter referred to as "Kangdexin")as the research object,explores the causes of its financial fraud,and further discusses how to deal with the specific methods and measures of financial fraud.Based on the financial statements of the five years before the fraudulent behavior of the case company,combined with the GONE fraud motivation theory,the main reasons for the company’s financial fraudulent behavior are: the lack of morality of the management and controlling shareholders,the failure of the company’s internal control and external audit,the company’s strategy Positioning errors,etc.From the perspective of the quality of financial status,once there are factors that affect the deterioration of the company’s capital structure,asset quality,profit performance and cash flow planning,it may induce companies to "take" the road of fraud.In the past,the identification of financial fraud cases mainly focused on the financial indicators of enterprises or abnormal accounting subjects,etc.,but this paper focuses more on the overall financial status and quality of enterprises.To achieve the purpose of analyzing the capital structure,asset quality,profit performance and cash flow planning,and then further grasp the development and changes of the quality of the financial status of the enterprise.Finally,based on the existing analysis,this paper puts forward corresponding suggestions for different market players,and also makes a research prospect for the development direction of this field.