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Detection of Fraud Statement Using Calculation Models M-Score and F-Score: Evidence from Chinese Companies Listed in the United States

In: Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022)

Author

Listed:
  • Ruixuan Zhou

    (Beijing Normal University - Hong Kong Baptist University United International College, Division of Business and Management)

  • Jiani Yin

    (Shenzhen Middle School)

  • Yuanheng Feng

    (Yunnan University, School of Business and Tourism Management)

  • Chenlin Xu

    (International College, Huaqiao University)

  • Runhe Zhu

    (Kimball Union Academy, State of Connecticut 03770)

Abstract

ABSTRACT In recent years, the cases of financial fraud within China’s listed companies in the U.S. have increased. Financial fraud usually fails to reflect the normal profitability of enterprises and harms the interests of small and medium investors, disturbing the normal operation of the market as a result. The goal of this study was to examine whether M-Score and F-Score models are fit for U.S.-listed Chinese Companies and to find clues to financial fraud of Chinese enterprises. To this end, we applied M-Score and F-Score models to 2 groups (14 samples) of companies from 5 different industries. There is a 13-year span between the earliest and latest allegations of financial fraud. The sample companies that have been caught in fraud were chosen to be the experimental group (EG) and the companies without committing fraud were selected to be the control group (CG). The findings suggest that M-Score model fits the U.S.-listed Chinese companies, while there is insufficient evidence to prove that F-Score model can be applied.

Suggested Citation

  • Ruixuan Zhou & Jiani Yin & Yuanheng Feng & Chenlin Xu & Runhe Zhu, 2022. "Detection of Fraud Statement Using Calculation Models M-Score and F-Score: Evidence from Chinese Companies Listed in the United States," Advances in Economics, Business and Management Research, in: Yushi Jiang & Yuriy Shvets & Hrushikesh Mallick (ed.), Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022), pages 780-790, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-036-7_115
    DOI: 10.2991/978-94-6463-036-7_115
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