Analysis of Financial Fraud Supervision of Listed Companies Based on Game Theory--Take Luckin Coffee as an Example

North China University of Technology, Beijing, China

^* Corresponding author: ijanma2021@163.com

Abstract

In the development of the capital market, financial fraud of listed companies often occurs, which leads to the untrue disclosure of information. It seriously affects the stability and fairness of the market. The financial fraud involving listed companies and regulators is also a typical game problem, and the ultimate goal of game analysis is to make all parties reach an ideal equilibrium state. Therefore, this paper conducts an in-depth case study on the social issue of Luckin Coffee’s financial fraud and builds a specific regulatory game model. The conclusion is that the probability of choosing financial fraud by listed companies is affected by four factors: the cost of supervision, the probability of being accused, the fine and the reputation loss to the regulator. Reducing supervision costs and increasing fines can effectively prevent the occurrence of financial fraud. So this paper also puts forward some suggestions, in order to promote the healthy development of Chinese financial market.