luckin coffee financial fraud
225408222
Corporate governance: five factor theory based financial fraud identification
Abstract The frequent occurrences of financial fraud in listed companies have had a serious impact on the stable development of the capital market. The Chinese company, Luckin Coffee, listed in the USA, recently confessed to fabricating transactions worth RMB2.2 billion and has received a delisting notice from NASDAQ. It can be seen that the detection and analysis of financial fraud behavior is very important not only for the internal governance of companies and for their external investors but also for regulatory agencies. This article uses a research method combining normative analysis with empirical research, utilizes a targeted selection of data from the listed companies penalized due to fictitious profits, uses the CRIME theory as the basis for normative analysis, and establishes a financial fraud identification model by means of empirical analysis. Finally, based on the research results of this article, we propose rational governance measures for countering the problems of fraud in financial statements of listed companies.
Mengshuang Du
229279641
The strategy and financial analysis of Luckin Coffee
Luckin breaks through the traditional mode and creates the miracle of the new retail mode of coffee.We analyze this new retail mode from different aspects: LuckinYe s operating strategy, competitor, SWOT analysis and so on, and we also give some suggestions that can help Luckin deal with some potential problems and seize the opportunity.
Economics and Management Science
Ming Chao Yang Yinghan Lv
212723430
Research on Financial Analysis of Luckin Coffee
Choosing Luckin Coffee as the research object, this paper analyzed its financial statements. More specifically, it stated the solvency, the operating ability, the profitability and the development ability of Luckin Coffeein detail. It is found that the advantages and disadvantages of Luckin Coffee can lead to some typical attributes, including the corporate profitability low in potential and efficiency, high development cost, the high risk of short term debt. This paper also put forward several strategies to settle these problems, targeting in improving the future financial benefit of the enterprise.
Menghao Wang
225799848
The Story of Luckin
In the early 21st century, China is labeled as fake and counterfeit by people around the world. But with the emergence of a series of Chinese companies in the world, people are starting to change their minds about Chinese companies. Although some companies are not very good, some powerful companies such as Alibaba still shock investors in the world. However, Luckin's financial fraud has ignited doubts about the Chinese concept stocks, and this time we mainly analyze the business logic and outlet of the company.
yongyuan qu
13817933
Big Five Audits and Accounting Fraud
Empirical studies of earnings management, audit pricing, and audit reporting provide extensive evidence that the Big Five public accounting firms are associated with higher quality financial statements (Francis 2004) Nevertheless, the recent high profile financial reporting failures that roiled the U.S. capital markets cast doubt on whether this proposition remains valid. Indeed, many commentators interpret the steep upward trend during the late 1990s and early 2000s in accounting misstatements by companies with Big Five auditors as almost conclusive evidence that their assurance services have deteriorated over time (e.g. Coffee 2002; Imhoff 2003; Zeff 2003) Measuring trends in absolute audit quality is typically infeasible, so we more narrowly focus on discriminating between the relative performance of the Big Five and non Big Five audit firms in preventing companies from orchestrating accounting fraud. Contrary to recent criticisms of the Big Five firms, we provide compelling evidence that they were consistently associated with a lower incidence of accounting fraud, even in the years shortly prior to the sweeping corporate governance reforms. Moreover, this finding is robust to controlling for the endogenous effects of screening by audit firms and selection by their clients.
Clive Lennox Jeffrey A Pittman
73669245
Can John Coffee Rescue the Private Attorney General? Lessons from the Credit Card Wars
Partisans on one side of the class action debates argue that the class device is a critical enforcement tool that increases much needed access to justice. Combatants on the other side scoff that class actions are tools for shaking down corporations for settlement payments and attorneys' fees in unmeritorious cases. In his most recent book, Entrepreneurial Litigation: Its Rise, Fall and Future, John C. Coffee puts both sides in their place, providing an account that, he aptly tells us, "has long been missing in the literature, in large part because academics writing in this area either have been so ideologically committed to the private attorney general concept or so implacably opposed to it" that they've failed to fully examine its consequences. If it is a virtue of the class device that it can aggregate a large number of small interests and that surely is a virtue for Coffee then a corresponding detriment is that the named plaintiffs' interests are too small to warrant any substantial investment in monitoring the lawyers. And for Coffee, the predictable result is what he terms "abusive litigation" the attempt by lawyers to leverage the scale of class cases to coerce unwarranted settlements. Reform, according to Coffee, "requires that the merits need to matter more." To ensure that plaintiffs' counsel make investment decisions based on case merit, rather than exploitable cost asymmetries, Coffee would have lawyers assume a measure of financial responsibility for the fees and expenses incurred in unmeritorious actions. This book review assumes that Professor Coffee's proposals would solve the "abusive litigation problem," and then examines, in this hypothetical post reform world, how we really regard the private attorney general model that is at the core of class actions. The inquiry focuses on consequential class cases that seek structural institutional reform through injunctive relief, because it is mandatory non opt out class claims under Rule 23(b)(2) that bring into starkest relief concerns about the assumption of power by private actors. And the ongoing Payment Card class actions brought by merchants against Visa, MasterCard and American Express (the author's extraordinary personal connection to which is disclosed in the essay) form an almost perfect laboratory for examining these issues. This essay explores concerns with self nominated class counsel assuming public functions including, for example, the negotiation of rules that bind entire industries and the prosecution of cases that public enforcers have affirmatively elected not to pursue. And centrally, this essay investigates the unease that the traditional bar and commentariat feel with the on the ground, actual practice of complex class litigation. We are afforded a rare backstage pass to observe these practices because of the extraordinary fact that a Willkie Farr partner was arrested for perpetrating an unrelated fraud upon her client, MasterCard, leading to the disclosure of thousands of emails, including many with plaintiffs' lead counsel in the Amex case. And the reactions of all concerned to those unvarnished communications illustrate a high impact collision of realism and formalism. The realist, emblemized by John Coffee, asks what the entrepreneurial lawyer actually does and why and, in this case, would find a lawyer intent on achieving industrial reform for his clients, practicing all the politics and diplomacy necessary to get there. The formalist, embodied here by the district judge in the Amex case, relies on ex ante rules and precepts regarding proper lawyer comportment, in order to obviate nettlesome ex post inquiry into whether the attorney has indeed rendered loyal and able service to his principal. Professor Coffee may yet solve the abusive litigation problem. But even so, deep skepticism of the private attorney general model born of long experience with abusive litigation will surely persist, vestigial, like a phantom limb.
Myriam E Gilles
154644137
A Theory of Corporate Scandals: Why the U.S. And Europe Differ
A wave of financial irregularity in the USA in 2001 2 culminated in the Sarbanes Oxley Act. A worldwide stockmarket bubble burst over this same period, with the actual market decline being proportionately more severe in Europe. Yet, no corresponding wave of financial scandals involving a similar level of companies occurred in Europe. Given the higher level of public and private enforcement in the USA for securities fraud, this contrast seems perplexing. This paper submits that different kinds of scandals characterize different systems of corporate governance. In particular, dispersed ownership systems of governance are prone to the forms of earnings management that erupted in the USA, but concentrated ownership systems are much less vulnerable. Instead, the characteristic scandal in such systems is the appropriation of private benefits of control. This paper suggests that this difference in the likely source of, and motive for, financial misconduct has implications both for the utility of gatekeepers as reputational intermediaries and for design of legal controls to protect public shareholders. The difficulty in achieving auditor independence in a corporation with a controlling shareholder may also imply that minority shareholders in concentrated ownership economies should directly select their own gatekeepers. Copyright 2005, Oxford University Press.
John C Coffee
14586491
MVE 220 Financial Risk Reading Project WorldCom
To write this report both members of the group have contributed equally. Conclusions were made through discussion within the group. Introduction The story of WorldCom started with a plan on how to create a long distance telephone service provider, sketched on a napkin in a coffee shop back in 1983. The company started out as Long Distance Discount Service (LDDS) the following year, and grew through acquisitions and mergers into United State's second largest long distance telephone company by the end of the 20th century. With a worldwide presence it seemed poised to become one of the world largest telecommunications corporations. Instead, it filed the largest bankruptcy, of some $79.5bn, in the U.S. history at the time. The question is then how could this happen and why did it happen? There are of course several key factors leading up to the huge amount of money filed in the bankruptcy, and these will be discussed here. From Nothing to Everything It all started back in 1984 when the LDDS was founded, in the following year, the CEO up to the bankruptcy, Mr Bernhard Ebbers was appointed. [1] Described as likable and colorful by supporters and greedy and incompetent by others [2] he will play part of the upcoming ruin of WorldCom. But at the time he helped LDDS grow into a huge worldwide renowned company, renamed to WorldCom in the early 1990's. He managed this by pursuing an aggressive policy of mergers and acquisitions. The 1990's were a time of growth and immense expansion in many areas, but especially the telephone and internet traffic, which were the main areas of focus for WorldCom. A capacity planner at WorldCom, Tom Stluka, created a model to predict the growth of the traffic handled by WorldCom. However, his model was a best case scenario, which suggested that the total internet traffic would double every 100 days. For reasons unknown, this model ended up at top of the company, and they chose to believe in the model. Therefore WorldCom went through with not less than 65 acquisitions and mergers during a seven year period from 1991 to 1997. These deals cost WorldCom almost $60 billion, and at the same time, accumulating a debt of $41 billion. [3] These sums are huge, and in order to live through these kinds of investments there has to be a good coordination and integration between new parts and old parts of the company this was not the case at WorldCom. Instead of actually integrating the assets, so expensively purchased, profit was created through sketchy bookkeeping and accounting fraud. This will be covered more extensively shortly, but first a short digression about the relation between Mr. Ebbers and a telecommunication analyst at the brokerage Solomon Smith Barney,
Daniel Pettersson Zoran Maracic
167451728
Reforming the Securities Class Action: An Essay on Deterrence and its Implementation
The securities class action cannot be justified in terms of compensation, but only in terms of deterrence. Currently, the damages recovered through private enforcement dwarf the financial penalties levied by public enforcement. Yet, the evidence is clear that corporate officers and insiders rarely contribute to securities class action settlements, with the settlement funds coming instead from the corporation and its insurers. As a result, the cost of such actions in the aggregate falls on largely diversified shareholders. Such a system is akin to punishing the victims of burglary for their negligence in suffering a burglary and does little to deter corporate officials who have private motives for engaging in securities fraud. The present structure of securities class actions benefits a trio of interest groups corporate officials, plaintiff's attorneys, and insurers but not shareholders. To reform the securities class action and give it a true deterrent orientation, this article proposes a variety of steps none requiring legislation or the reversal of well established precedents to shift the costs of the securities class action to the culpable. These steps proceed from the twin premises that (1) the settlement of a securities class action is a conflict of interest transaction requiring independent directors to exercise oversight over the allocation process, and (2) enterprise liability is an ineffective approach for misconduct that is privately motivated and easily concealed. To incentivize private enforcers, a basic change in the judicial approach to attorney's fees is proposed.
C John
154790588
The Development of Securities Law in the United States
Given the existence of contract, property, fraud, and company law, what is the purpose of securities laws? Broadly speaking, they can serve either of two functions, or some mix of both. The first is to facilitate contracting among entrepreneurs, managers, shareholders, and financial intermediaries by providing a standardized set of rights and obligations (La Porta et al. 2005) Such laws are motivated by the desire to reduce transaction costs where contracting parties are widely dispersed and both writing complete contracts ex ante and renegotiating ex post are difficult. A second possible function is to restrict contracting by limiting the set of legally available terms. Such laws reflect the view that securities markets are beset by market failures stemming from externalities or investor irrationality (Coffee 1984; Fox 1999; Langevoort 2002) For the sake of simplicity, we can call the first a "contracting" paradigm and the second a "regulatory" paradigm.
Paul G Mahoney