A Case Study Of Tongjitang Financial Fraud Based On GONE Theory

Since the beginning of the 21st century,the world economy has developed rapidly,and China’s capital market has been gradually improved.In order to integrate into the rapidly developing market,many listed companies have the need to expand their scale and increase their profits.However,while the number of listed companies has mushroomed,there are also some hidden dangers that are invisible to the regulatory authorities.In fact,in the process of the gradual improvement of the market economy,the relevant regulatory departments do have objective problems such as the system is not perfect and the punishment related to laws and regulations is not serious enough.These regulatory loopholes invariably provide some listed companies with opportunities for fraud,and they can make use of information disclosure,related party transactions,revenue recognition or costs and other means to whitewash financial statements and thus form financial fraud.Therefore,financial fraud of listed companies is mainly characterised by subjective intentionality,complexity of means,continuity of fraud and seriousness of consequences.This social chaos has seriously disturbed the normal operation of the Chinese securities market and has seriously affected investors’ decision making and investment confidence.So how to quickly and efficiently determine whether a listed company has fraud is the first problem we need to solve,and secondly we also need to think about how to stop such problems from happening.To sum up,it is of theoretical and practical significance for us to conduct research and discussion on the issue of financial fraud of listed companies.This article uses the literature research method and case study method,taking the financial fraud incident of Tongjitang as the main line,to disclose its financial fraud behaviors such as using forged bank documents to falsely increase deposits,falsifying business vouchers to falsely increase income,and related parties’ non operational occupation of funds.Based on the company’s own situation and market environment,and using GONE theory as a starting point,this paper comprehensively analyzes the motivations for Tongjitang Company to implement financial fraud from four perspectives,such as the greed factor reflected in the pursuit of self-interest by management employees,and low moral standards;The opportunity factor is reflected in the unreasonable ownership structure,inadequate internal supervision,and other aspects;Demand factors are reflected in corporate financing and delisting pressures;And the exposure factors reflected in the existence of loopholes in external supervision.The combination of these factors has led Tongjitang to choose the path of financial fraud.Finally,this article takes Tongjitang’s financial fraud as an example,taking small cases as an example,and deducing measures suitable for the entire listed company to prevent financial fraud from Tongjitang’s fraud cases,and elaborates on both internal governance and external supervision of the company.