The Failure of Kangmei, the Lesson of A-Shares

The financial fraud of Kangmei Pharmaceutical was exposed, and the scale of financial fraud reached the largest in the history of A-shares, which is shocking. On November 17, 2021, the Intermediate People’s Court of Foshan City, Guangdong Province publicly pronounced its judgment on the case of 12 people including Kangmei Pharmaceutical’s former chairman and manager of the China Securities Regulatory Commission, Ma Xingtian, for manipulating the securities market. There has been extensive discussion in the industry. This article will firstly sort out the whole story of the financial fraud incident in Kangmei Pharmaceutical, and analyze the means of financial fraud in Kangmei Pharmaceutical; secondly, it will focus on the audit failure and the failure of independent directors in the financial fraud case and the reasons; Finally, some suggestions are put forward from three aspects: Strengthen the internalgovernance, improve the external governance and the independent director system.