Monitoring and Analysis of Venture Capital and Corporate Fraud Based on Deep Learning

Abstract

With the continuous expansion of global investment institutions, the development of the investment industry is gradually accelerating, but the risks behind the investment are also constantly increasing. Using the data of A-share companies in China's capital market from 2010 to 2019, this paper studies the impact of venture capital on corporate fraud. Empirical results show that venture capital holdings reduce the probability and frequency of corporate fraud. These findings remain robust after mitigating endogeneity using PSM, Heckman's two-step, one-step approach, suggesting a causal relationship between venture capital holdings and fraud reduction. Further research shows that the way venture capital holdings reduce corporate fraud is to suppress corporate fraud by improving the company's internal and external information environment. Furthermore, venture capital holdings play an important role in the governance of corporate disclosure fraud and operational fraud, but not in the governance of TMT fraud. In addition, the venture capital has better inhibitory effects on the supervision and governance of the fraud frequency of nonstate-owned enterprises compared with state-owned enterprises. The results of this research imply that venture capital shareholding plays an important role in preventing corporate fraud. This study contributes to the researches about the value-added role of venture capital and reveals the governance effect of venture capital on corporate fraud. Besides, it provides the theoretical evidence for capitals to better serve the real economy.