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Ultimate Control Rights and Corporate Fraud: Evidence from China

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  • Min Wang
  • Jie He
  • Peng Xu

Abstract

This study uses the Shapley-Shubik Power Index to measure the ultimate control rights of companies listed on China’s main board market and empirically tests the effect of ultimate control rights on corporate fraud. We confirm that ultimate control rights have a significant restraining effect on corporate fraud. Specifically, the greater the ultimate control rights, the lower the probability of fraud and the fewer the number of frauds. Furthermore, we find that under different fraud subjects, fraud types, and fraud severity, this restraining effect still exists. In addition, we also find the ultimate control rights are negatively associated with fraud propensity, and are positively associated with fraud detection.

Suggested Citation

  • Min Wang & Jie He & Peng Xu, 2022. "Ultimate Control Rights and Corporate Fraud: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(4), pages 1206-1213, March.
    • Handle: RePEc:mes:emfitr:v:58:y:2022:i:4:p:1206-1213
    DOI: 10.1080/1540496X.2020.1845647
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