A Case Study on the Inhibition of Financial Fraud by Short Selling Mechanism: The Fraud Incident of Shenzhen Suntang Digital Technology Co., Ltd.

Xianhao Chen

doi:10.47297/wspdecWSP2515-797312.20261003

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A Case Study on the Inhibition of Financial Fraud by Short Selling Mechanism: The Fraud Incident of Shenzhen Suntang Digital Technology Co., Ltd.

Volume 10, Issue 3

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A Case Study on the Inhibition of Financial Fraud by Short Selling Mechanism: The Fraud Incident of Shenzhen Suntang Digital Technology Co., Ltd.
A Case Study on the Inhibition of Financial Fraud by Short Selling Mechanism: The Fraud Incident of Shenzhen Suntang Digital Technology Co., Ltd.
Guangdong University of Science and Technology, Dongguan, Guangdong, 523083, China
Vol. 10, Issue 3, Pages: 59-64(2026)
Published：30 March 2026
DOI：10.47297/wspdecWSP2515-797312.20261003
Accepted：

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Chen Xianhao.A Case Study on the Inhibition of Financial Fraud by Short Selling Mechanism: The Fraud Incident of Shenzhen Suntang Digital Technology Co., Ltd.[J].Development Economics of China,2026,10(03):59-64.
DOI：

Chen Xianhao.A Case Study on the Inhibition of Financial Fraud by Short Selling Mechanism: The Fraud Incident of Shenzhen Suntang Digital Technology Co., Ltd.[J].Development Economics of China,2026,10(03):59-64. DOI： 10.47297/wspdecWSP2515-797312.20261003.

摘要

Abstract

Listed company financial fraud is persistent

and traditional governance mechanisms have significant limitations in identifying systematic fraud. This paper aims to reveal the mechanism and transmission path through which short-selling mechanisms (broadly defined as market-based monitoring) restrain financial fraud. Using a single case study method

this paper takes Guangdao Digital (839680.BJ)

the first company forcibly delisted from the Beijing Stock Exchange for material violations

as the research object. Based on multiple sources of evidence including the Administrative Penalty Decision of the Shenzhen CSRC Bureau

corporate announcements

annual reports

authoritative media reports

and business big data

a systematic analysis is conducted. The results show that the company inflated its cumulative operating revenue by RMB

and this systematic analysis is conducted. The results show that the company inflated its cumulative operating revenue by RMB. with The proportion of inflated revenue reaching as high as 85.87% -- 99.39% in each period

audit firm issued 1.465 billion yuan unqualified audit opinions for six consecutive years

while the traditional confirmation letter procedure completely failed due to the company's practice of "intercepting confirmation letters offline and privately affixing false seals." After the media investigation exposure

the Beijing Stock Exchange issued an inquiry letter on the same day

and the CSRC launched an investigation the next day. The company was eventually forced to delist

and the sponsor established an advance compensation fund of RMB 210 million. The study finds that short-selling mechanisms restrain financial fraud through a three-stage "trigger–transmission–sanction" pathway. Media investigations

as "short-selling-like events

" are functionally homologous to formal short-selling reports and can effectively trigger regulatory intervention and market clearing. This paper expands the research boundary of short-selling mechanisms and provides empirical evidence for improving the capital market short-selling system and clarifying the legal liability of third parties that collude in fraud in the revision of the Accounting Law.

关键词

Keywords

references

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