RESEARCH ON FINANCIAL FRAUD OF LUCKIN COFFEE

Abstract

A chain of coffee shops in China called Luckin Coffee (China) co., which operates through Internet data, has been offering discounts and promotions since its opening. Luckin's shares were suspended after the company was found to have falsified its financial statements for the previous year, trading 2.2 billion RMB, or about $1.5 billion, less than a year after going public. This paper will take the time line as the basic data research, with the purpose of understanding in detail the operation mode of Luckin Coffee (China) co., ltd. and how to conduct financial fraud, and exploring the long-term impact of financial fraud on the company and the market. This paper will use quantitative research method, mainly using Luckin Coffee company's annual financial statements and the company's stock price at different periods as research data. According to existing theories, Luckin Coffee will be fined heavily and may go bankrupt and withdraw from the market in the future. However, this research is limited to the fact that a specific investigation into the company's fraud is not yet complete, and that us investors are suing the company in a class action, the outcome of which cannot be foreseen at this time. Future research can focus on how the company's operating model is more reasonable and how to supervise the xiv financial department to follow accounting professional ethics from the perspective of consumers.