Evolutionary game analysis of financial fraud governance behavior of listed companies based on Prospect Theory

DOI

10.2991/978-94-6463-270-5_51How to use a DOI?

Keywords

Listed companies; Financial fraud; Governance behavior; Prospect theory; Evolutionary game

Abstract

To solve the problem of financial fraud of listed companies is the fundamental way to maintain the smooth operation of the whole stock market. In order to explore the related problems of the governance of the financial fraud of the listed companies, the prospect theory is introduced in the process of constructing the evolutionary game model between the listed companies and the regulatory departments, and the limited rationality is run through the listed companies. In the whole decision-making process of the supervision department, the strategy selection and evolution path and mechanism of the related game subject are analyzed under the condition of the uncertainty of the risk, and the game model is simulated and analyzed with the Matlab tool. The research shows that only when the difference between the regulatory cost and the actual income is greater than the negative income that the non regulation may bring and the perceived benefit of the listed company’s non fraud is greater than the perceived net income that the fraud can bring, the system will eventually evolve to the supervision of the regulatory department and the listed company will not go out of fraud. This stable strategy, at the same time, due to the strong sensitivity of the listed companies to the degree of loss and the corresponding perceived value, should increase the punishment of the fraudulent behavior of the listed companies or the related rewards to the behavior of non fraud. Among the above two measures, the listed companies are more sensitive to the punishment intensity.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - JinLong Wang
AU  - Yan Xu
PY  - 2023
DA  - 2023/10/29
TI  - Evolutionary game analysis of financial fraud governance behavior of listed companies based on Prospect Theory
BT  - Proceedings of the 3rd International Conference on Internet Finance and Digital Economy (ICIFDE 2023)
PB  - Atlantis Press
SP  - 459
EP  - 469
SN  - 2667-1271
UR  - https://doi.org/10.2991/978-94-6463-270-5_51
DO  - 10.2991/978-94-6463-270-5_51
ID  - Wang2023
ER  -