Research on Legal Issues of Financial Fraud in Listed Companies

Abstract

In the rapidly developing economy, with the increasing frequency of socio-economic activities, the number of listed companies is also growing. As an important part of China's non-state-owned economy, the information disclosure of listed companies is particularly important and serves as a crucial indicator for small and medium investors. However, in the prosperous market economy, some listed companies, in order to attract more investors, resort to financial fraud, such as issuing false invoices, creating fictitious transactions or related party transactions, and other means to inflate profits and deceive investors’ funds. This undoubtedly undermines China’s socio-economic order and reduces the public’s trust in the securities market. Due to the imperfect market economy rules, inadequate legal system, and incomplete internal control systems in China, financial fraud occurs very frequently. Financial fraud not only harms the interests of small and medium investors but also disrupts the social and economic order. Next, this paper will explore the means and motivations of financial fraud to delve into the essence of financial fraud.