Financial statement fraud, recidivism and punishment

Yang Wang, John K. Ashton and Aziz Jaafar

Emerging Markets Review, 2023, vol. 56, issue C

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 simultaneously. 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.

Keywords: Financial statement fraud; Corporate governance; Punishment; Recidivism (search for similar items in EconPapers)
JEL-codes: G30 G38 M41 M48 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:56:y:2023:i:c:s1566014123000389

DOI: 10.1016/j.ememar.2023.101033

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