Strategic Repair After Corporate Financial Fraud: Path, Effectiveness and Implications

Hongmin Pu and You Wu ()
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Hongmin Pu: EIC EDUCATION Shanghai
You Wu: Shanghai Shixi High School

A chapter in Proceedings of the 2025 International Conference on Financial Innovation and Marketing Management (FIMM 2025), 2025, pp 172-178 from Springer

Abstract: Abstract After financial fraud is exposed, companies usually take "self-rescue" measures positively to minimize economic losses and repair the reputation of companies. According to the financial fraud of Luckin Coffee, this article conducts a long-term tracking analysis of quarterly financial statements and analyzed the changing trend of Luckin Coffee’s financial status by using the Z-score model. The article focused on two key financial measures Luckin Coffee took, exploring their long-term effectiveness and effects. The results show that the strategy of "opening up franchise to expand the market" measure adopted by Luckin Coffee can bring long-term sustainable and positive development to the company effectively. The "new product release" measure has been improving Luckin Coffee’s financial position effectively and significantly in the short term, with limited impact in the long-term. Although post-crisis response measures can restore the financial structure and market confidence of companies to a certain extent, companies should firm to the bottom line of compliance, strengthen internal governance, and prevent the occurrence of financial fraud fundamentally.

Keywords: Financial Fraud; Luckin Coffee; Enlightenment and Results (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-874-5_22

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DOI: 10.2991/978-94-6463-874-5_22

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