ABSTRACT
Chapter 8 discusses the asset-misclassification, earnings management, asset-quality management and Incentive-effects Management perpetrated by Chinese VIEs (variable interest entities) and Chinese Reverse-Merger Companies (CRMs) since 2000 and in stock markets in Canada, USA, Singapore, China and Thailand. These vehicles have been used to finance economic development and growth in Chinese industries; and they have or can have economic and psychological Multiplier Effects and Inequality that can continue to spill over into other countries/continents (such as Mexico and ASEAN countries). Chapter 8 also introduces economic psychology theories that pertain to fraud, News-Contagion, Fintech-Enabled Phenomena and Mass-Cognition. The chapter explains why Third-generation Prospect Theory (and related approaches) is invalid. Structural Change and Asset-Pricing implications are also discussed.
