The Economic Anlysis on Accounting Fraud and Accounting Governance

The damage of accounting fraud is catastrophic to economic development. Accounting fraud is the results of trade-off between pursuits of the interests and minimum the regulatory expenses as well as the illegal manners of bucking for economic benefits. We analyze the behavior of the accounting fraud by using economic principles, and construct the optimal dynamic process for the effectiveness of accounting fraud. We also do location analysis of the optimal allocation for investigation efforts and punishment intensity of the accounting governance. We further give the policy recommendations on accounting fraud control.