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Asset Quality and Corporate Fraud |
WANG Yongyan1,NIU Yuhao2,LI Xinyu1,LU Chuang2 |
1. School of Business, Renmin University of China
2. School of Accounting, Central University of Finance and Economics |
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Abstract Using the data of all publicly listed firms in China from 2003 to 2015, this paper examines whether the asset quality affects the probability of firms’ committing frauds. The results show that good asset quality can significantly decrease the probability of firms’ committing frauds. These results are still robust after addressing potential endogenous problems. In addition, this paper finds that the negative impacts of asset quality on corporate fraud is not significantly in non-information disclosure fraud. This paper also finds that the internal and external environments of the firms can influence the negative impacts of asset quality on corporate fraud. The findings contribute to the literature by identifying an important factor which can affect corporate fraud and provide evidence for the necessity of the reform of accounting standards in China.
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Received: 22 December 2017
Published: 15 October 2018
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Corresponding Authors:
WANG Yongyan
E-mail: 15801345199@139.com
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