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Analysis of Financial Fraud Motives and Consequences Based on the POR-GONE Model: A Case Study of Company H

Author(s)

Fanjun Sun, Xuecheng Wang*, Lingmin Li

Affiliation(s)

School of Economics and Management, North China Uniersity of Technology, Beijing, China *Corresponding Author

Abstract

With the continuous development of the capital market, financial fraud by listed companies occurs from time to time, and how to effectively curb it has become a key research focus in the academic community. Financial fraud not only seriously affects the economic development of enterprises themselves but also exerts a significant impact on the long-term stable development of China's securities market. This paper studies the financial fraud case of Company H based on the GONE theory. On the one hand, it conducts an in-depth analysis of the motivations behind Company H's financial fraud from four dimensions: Greed, Opportunity, Need, and Exposure: Firstly, the founders of Company H had greedy motives, and the enterprise had loopholes in internal control. Secondly, Company H was under financing pressure, and financial fraud helped the company successfully pass the review of the China Securities Regulatory Commission (CSRC). Thirdly, the auditing institution failed to maintain sufficient professional skepticism during the audit process. Finally, the intensity of punishment was insufficient to achieve a warning effect. On the other hand, based on the analysis of the motivations for financial fraud, this paper puts forward the following measures to prevent and control corporate financial fraud: First, strengthen the construction of integrity, probity, and moral awareness within the management of modern enterprises; second, accelerate the transformation and structural upgrading; third, strengthen the internal supervision and external control of the enterprise management; fourth, increase the intensity of punishment and accountability for corporate financial fraud and improve the claim coordination mechanism for external investors. It is hoped that through the research in this paper, the financial fraud of film and television companies can be effectively curbed, thereby promoting the healthy development of China's listed companies and maintaining the stability of the capital market.

Keywords

Financial Fraud; Fraud Motivation Analysis; Fraud Prevention; GONE Theory

References

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