Author(s)

ZengXian Xiang

Affiliation(s)

School of Business Administration, Baise University, Baise 533000, Guangxi, China.

Corresponding Author

ZengXian Xiang

ABSTRACT

This study aims to explore the inducement effect of performance appraisal standards on financial report fraud in listed companies. Through literature review and theoretical analysis, it examines the accounting manipulation tactics and motivations employed by management under stringent performance standards from the perspectives of agency theory, behavioral economics, and corporate governance structure. The results show that excessively high performance appraisal standards significantly increase the likelihood of management engaging in inappropriate accounting strategies, such as inflating revenues, reducing costs and expenses, and adjusting fair values, leading to financial misreporting. The study suggests optimizing performance standards, strengthening corporate governance and external supervision, and utilizing big data and artificial intelligence to reduce financial fraud and enhance the transparency and fairness of capital markets.

KEYWORDS

Financial report fraud; Performance appraisal standards; Accounting strategies; Corporate governance; Agency theory; Behavioral economics

CITE THIS PAPER

ZengXian Xiang. Financial report fraud in listed companies: accounting strategies induced by performance appraisal standards. Journal of Trends in Financial and Economics. 2024, 1(2): 7-11. DOI: https://doi.org/10.61784/jtfe3014.

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