Fraud, Market Reaction, and the Role of Institutional Investors in Chinese Listed Firms
研究中国上市公司财务欺诈的类型与程度，发现欺诈公告引发强烈负面市场反应，且欺诈更可能发生在独立董事比例低和业绩差的公司；共同基金持股能有效抑制欺诈，发挥监督作用。
The extent and type of financial fraud committed by listed firms in China, stock market reaction to the detection and announcement of fraud, and the association between institutional ownership and financial fraud are the subjects of this article. Using fraud data from the period between 2001 and 2011, the authors find wide occurrences of fraud and a strong negative market reaction on the announcement date, particularly in cases of serious fraud. Fraud is more likely to occur at firms that have a smaller proportion of independent directors and at poorly performing firms. Firms with higher mutual fund ownership subsequently have fewer incidences of fraud. Our results reports by the authors indicate that ownership by independent institutions, such as mutual funds, serves as an effective monitoring mechanism, deterring fraud and enhancing corporate governance in Chinese capital markets. <b>TOPICS:</b>Emerging, portfolio management/multi-asset allocation, mutual funds/passive investing/indexing