Internal Control Deficiency or Regulatory Failure? A Triangulated Case Study of Zixin Pharmaceutical Applying the Fraud Triangle Framework

DOI

10.2991/978-94-6239-642-5_12How to use a DOI?

Keywords

Financial Fraud; Zixin Pharmaceutical; the Fraud Triangle Framework

Abstract

In recent years, financial fraud has become a significant issue in the corporate world, posing a serious threat to investors and market integrity. This paper applies the Fraud Triangle Theory to analyze the case of financial fraud at Zixin Pharmaceutical and briefly compares it to Kangmei Pharmaceutical to highlight common weaknesses in regulatory mechanisms. The research focuses on identifying the motivations behind Zixin Pharmaceutical’s fraudulent behavior by in-depth analyzing its internal controls, regulatory oversight, and enforcement mechanisms. The results indicate that Zixin Pharmaceutical’s management, under pressure from performance expectations and financing demands, exploited internal control weaknesses and regulatory loopholes to engage in fraudulent practices, including fictitious transactions and revenue inflation. The comparison with Kangmei Pharmaceutical further emphasizes the need to strengthen internal controls, enhance external audit quality, and strengthen regulatory enforcement to curb financial fraud effectively. This study contributes to the existing literature by providing a detailed analysis of industry-specific causes of financial fraud in the ginseng trading sector and specific recommendations for improving corporate fraud detection and regulatory prevention mechanisms. The insights gained from this research can help strengthen regulatory frameworks and corporate governance practices, ultimately fostering a more transparent and trustworthy financial market environment.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Sixuan Zhu
PY  - 2026
DA  - 2026/04/29
TI  - Internal Control Deficiency or Regulatory Failure? A Triangulated Case Study of Zixin Pharmaceutical Applying the Fraud Triangle Framework
BT  - Proceedings of the 2026 11th International Conference on Financial Innovation and Economic Development (ICFIED 2026)
PB  - Atlantis Press
SP  - 105
EP  - 113
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-642-5_12
DO  - 10.2991/978-94-6239-642-5_12
ID  - Zhu2026
ER  -