Abstract: Based on Cressey's (1953) fraud risk theory, the proxy variables for pressure, opportunity, and rationalization related to corporate violations are summarized. With the case study of 220 A share public firms with 430 times violations found by CSRC and matched samples in the period of 2000-2008, a discriminant modeling is built by univariate analysis and conditional Logistic analysis. The findings are as follows: in terms of pressure proxy variables, the firms with high financial stability, assets growth, and leverage are prone to violations. In terms of opportunity proxy variables, firms with frequent board meetings and a dual structure are likely to violate the regulations. In terms of rationalization proxy variables, firms with qualified audit opinion and high accrual ratio are unlikely to break the rules. Auditor change induces firms to violate the rules. The precision of the models is 81.06% and 80.62% for original and test samples, respectively.

Key words: corporate violation, fraud triangle, financial fraud, Logit regression