Financial statement fraud, recidivism and punishment

Yang Wang; John Ashton; Abdul Aziz Jaafar

doi:10.1016/ j.ememar.2023.101033

Financial statement fraud, recidivism and punishment

Yang Wang^*, John Ashton, Abdul Aziz Jaafar

^*Corresponding author for this work

Management

Research output: Contribution to journal › Article › peer-review

Abstract

This study examines the relationship between the high reported levels of recidivism committed by Chinese firms and different punishments between 2007 and 2019. We find that there are six major types of financial statement fraud with many firms employing multiple fraud techniques simultaneousljavascript:void(0);y. When administrative and supervisory measures are used to punish fraudulent firms, recidivism is significantly reduced. In contrast, when self-regulatory measures are used to punish fraudulent firms, we report recidivism is not reduced yet increases. The results imply administrative measures are the most effective measures to tackle reoffending and self-regulatory measures are the least effective punishment.

Original language	English
Article number	101033
Journal	Emerging Markets Review
DOIs	https://doi.org/10.1016/ j.ememar.2023.101033
Publication status	Accepted/In press - 15 May 2023

Keywords

Financial statement fraud, Corporate governance, Punishment, Recidivism

Access to Document

10.1016/ j.ememar.2023.101033Licence: CC BY-NC-ND

Cite this

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title = "Financial statement fraud, recidivism and punishment",

abstract = "This study examines the relationship between the high reported levels of recidivism committed by Chinese firms and different punishments between 2007 and 2019. We find that there are six major types of financial statement fraud with many firms employing multiple fraud techniques simultaneousljavascript:void(0);y. When administrative and supervisory measures are used to punish fraudulent firms, recidivism is significantly reduced. In contrast, when self-regulatory measures are used to punish fraudulent firms, we report recidivism is not reduced yet increases. The results imply administrative measures are the most effective measures to tackle reoffending and self-regulatory measures are the least effective punishment. ",

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AU - Jaafar, Abdul Aziz

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