Sensitivity and Additional AnalysisA propensity score matching approach was used to determine the level of fraud committed by the CEO’s. In order to undertake the research, two types of firms having economically relevant characteristics were selected and divided into two groups i.e. Firms committing fraud and Non-fraud firms. Based on the fraud determinants such as, audit committee, COE age and tenure, largest shareholder, board size etc., the results indicated that firms with an audit committee have a less chance to commit fraud. It was also found that fraud is potentially endogenous based on the factors such as firm-level ownership, economic and corporate governance. CEO Compensation, Political Connection and Corporate FraudThe results indicated a noteworthy negative relationship between CEO Compensation and Corporate Fraud in Chinaand also between CEO Compensation and the seriousness of the fraud. These results indicate that it is not only the State Owned Enterprises (SOE’s) but also the CEO’s political connections which influence the enforcement actions.CEO Turnover and Corporate FraudThe empirical findings showed that there is a negative association between COE compensation and company fraud. CEO Appointment Time and FraudThe main findings showed that CEO’s receive compensation penalty if the fraud occurs during their tenure at the firm but not before the CEOs appointment. This supports the argument that members of the board compensation reduction to penalize Chinese CEOs if they commit a fraud. Alternative Measures of Serious FraudThe result indicated from the statistical data showed a negative correlation between CEO pay and corporate fraud in China. CEO Total Compensation and FraudThe findings showed that there is a negative association between CEO total compensation and the seriousness of the fraud the firm has committed.Average Executive Compensation and FraudThe findings from this data suggested that along with the CEO the average top executive may also suffer from a pay cut if there is an indication of fraud in the firm. Chairperson Compensation and FraudFurther data indicates that CEOs are fined by receiving lowerpay compensation if they commit a fraud. Based on all these findings and keeping agency theory in mind, it can be assumed that CEOs will behave in an opportunistic way to maximize their wealth at the expense of the shareholders. It is important for firms to establish contractual agreements to monitor the agents (i.e. CEOs) and ensure that their goals align with those of the owners.

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