The analysis of Nanfang financial fraud - a feature of the state-listing company and information asymmetry in describin a problem of the Chinese stock exchange

In 2012 a financial fraud of the state company Nanfang Textile has caused a storm of indignation of investors of a stock exchange. This textile company during the period from 2005 to 2010 provided the reporting, many times overestimating profitability indicators. In total, the sum of financial fraud has made 350 million yuans. At the same time the mechanism of delisting at the Chinese exchange isn't fulfilled that has threatened financial wellbeing of investors, and the soft measure of punishment for the violator became the reason of increase in cases of financial frauds. The article describes prerequisites of the financial fraud, a consequence for the stock exchange, the analysis of holes on securities market. The author has offered ways of minimization of the financial frauds connected with the distortion of figures in public reports.