Money shouts! How effective are punishments for accounting fraud?

Yang Wang, John K. Ashton, Aziz Jaafar*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


This study examines the impact of different punishments for Chinese accounting fraud on shareholder valuation of firms between 2007 and 2016. From an examination of both monetary and non-monetary ‘name and shame’ penalties, it is reported all punishments have a negative and significant impact on the shareholder wealth of fraudulent firms. Investors perceive punishments involving monetary penalties far more severely than non-monetary punishments used to combat accounting fraud. Stock market reactions are also sensitive to the type of fraud committed with manipulation of recognition and disclosure fraud viewed more negatively by investors than fraud related to disclosure. Information leakage to capital markets prior to the announcement of punishments is also observed. It is proposed fines have been relatively more effective, than ‘name and shame’ punishments in addressing Chinese accounting fraud during the last decade, due not least to information leakage.

Original languageEnglish
Article number100824
JournalBritish Accounting Review
Issue number5
Publication statusPublished - 28 Mar 2019

Bibliographical note

Publisher Copyright:
© 2019 Elsevier Ltd


  • Accounting fraud
  • Event study
  • Information leakage
  • Punishment
  • Stock market reaction

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