Research on Legal Accountability for Fraudulent Practices by a Public Company
Date Issued
2010
Date
2010
Author(s)
Lin, Yi-Chun
Abstract
There have been quite a few incidents of financial crisis happening to public companies such as China Rebar CO., LTD, Chia Hsin Food and Synthetic Fiber Co.,Ltd., Procomp Informatics Ltd., Infodisc Technology Co.,Ltd causing chaos and instability to the stock market in Taiwan. The crisis is, in fact, originated from a series of malpractices including fraud in transaction cycle, fabricate of financial reports, insider trade of stock shares, and embezzlement of company assets and properties. Such a substantial financial loss will translate into company''s liability as well as individual investors'' loss. As a result, the company will face difficulty in restructure and bankruptcy, thus hurting people''s faith in domestic investing environment with an adverse impact on Taiwan Stock Exchange market. It is desirable to detect and prevent this kind of corporate issues from occurring. The objective of this thesis research is to develop an effective pre-fraud warning mechanism while maintaining a balance between the suppression of malpractices and free market trade.
This research will focus on the investigation and analysis of corporate malpractices and underlined stereotypes with support from relevant points of view and publications by domestic and international scholars. Through in-depth case by case study of the above-mentioned public companies, this research will develop a list of common symptoms against their disclosed information. A subsequent monitoring of the crime committed by those companies will be used as a check and balance. Finally, this research will accomplish with a presentation of pre-fraud warning mechanism.
The important findings from this research are summarized as follows. 1. Although there appear to be a variety of malpractices, one can trace the symptoms from their disclosed information (both financial and non-financial aspects) on the publicly issued website before the fraud becomes out of control. 2. The punishments of those company committed fraud are governed by the special laws within securities trade regulatory. The lawsuit will certainly deter the company management from commit to such a crime. 3. This research suggests that government shall establish a thorough database for pre-fraud warning, intensively monitor the accuracy of disclosed information by public companies, and develop a lookup table of pre-fraud warning criteria against regulatory laws. The purpose is to ensure the flexibility upon execution of the law and to prevent misjudgments from happening.
Subjects
Corporate Governance
Fraudulent Practices
China Rebar CO., LTD
Chia Hsin Food and Synthetic Fiber Co.,Ltd.
Procomp Informatics Ltd.
Infodisc Technology Co.,Ltd
SDGs
Type
thesis
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