Influence of Financial Fraud Scandal on Listed Companies

Abstract

The revelation of financial fraud scandals will hugely impact the stock prices of listed companies. Taking the financial fraud case of Luckin Coffee in 2020 as an example, it can be shown that after the listed companies lose their investment credit, the impact on the company's development is enormous.After the fraud case of RMB 2.2 billion, Luckin Coffee's stock market continued to delist and fell into the powder sheet market. The company was in a dilemma, its development was stagnant, and it faced changes in management, equity owners, and many other aspects. Broken promises for listed companies, investment market, investors to reduce the investment confidence, management and the equity in the company all changes, the flaws of the company's financial regulation, is a great test to sound development of listed companies，Listed companies need more standardized supervision and more effective information disclosure to maintain their healthy development. This article enriches the academic literature on financial fraud and let investors know more about the impact of financial fraud on companies.