Title: Financial statement fraud: US and Chinese case studies

Authors: Md Jahidur Rahman; Hu Jiaying; Md Moazzem Hossain; Shyamapada Biswas; Moutushi Tanha; Tarek Rana

Addresses: College of Business and Public Management, Wenzhou-Kean University, 88 Daxue Road, Ouhai, Wenzhou, China ' College of Business and Public Management, Wenzhou-Kean University, 88 Daxue Road, Ouhai, Wenzhou, China ' Murdoch Business School, Murdoch University, Perth, Australia ' School of Business, Ahsanullah University of Science and Technology, Dhaka, Bangladesh ' UC Business School, University of Canterbury, Christchurch, New Zealand ' Department of Accounting, School of Accounting, Information Systems and Supply Chain, College of Business and Law, RMIT University, Melbourne, Australia

Abstract: This research aims to compare financial statement fraud in China and the USA. This research conducted data analyses from 20 companies between 2016 and 2020, specifically, ten US companies and ten Chinese companies. The ten companies have financial disclosure problems and are limited liability companies. The findings of the study show that senior management, CPAs, and auditors are mainly responsible for the financial statement fraud in both countries. In addition, weak internal controls and irresponsibility are the motivations or factors that facilitate financial statement fraud. Consistent with prior literature, the senior management and other individuals are more responsible for the financial statement fraud in the US companies compared with in the Chinese companies. Moreover, the hiring of independent directors with local political connections to prevent financial statement fraud may not be applicable to US companies. Findings provide a better understanding between the financial statement fraud and the various factors connected to the financial statement fraud in China and the USA. The results have theoretical, managerial, and practical implications to the regulators and policymakers.

Keywords: perpetrators; methods; motivations and factors; detection; outcomes; prevent; financial statement fraud.

DOI: 10.1504/IJMFA.2023.133781

International Journal of Managerial and Financial Accounting, 2023 Vol.15 No.4, pp.413 - 441

Received: 27 Jan 2022
Accepted: 21 Sep 2022
Published online: 03 Oct 2023 *

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