Positive Research on the Financial Statement Fraud Factors of Listed Companies in China

This paper studied the ＂pressure＂ and ＂opportunity＂ factors that caused financial statement fraud on the basis of the data of 41 A-share listed companies （1999-2004） in China which had been forfeited by China Securities Regulatory Commission （SRC） because of accounting irregularities. The author found that avoiding ＂ST＂ and ＂PT＂ was the primary pressure, and the opportunities mainly came from the higher top 10 shareholders＇ ownership concentration, the lower proportion of independent directors, the fewer number of directorate meetings and shares owned by the directorate members, board chairman and CEO held by one person and the ineffective supervisor boards. We also found that the companies involved financial statement fraud had the lower first majority shareholder＇s share proportion and they changed CPA firm more frequently.

Positive Research on the Financial Statement Fraud Factors of Listed Companies in China