Abstract: By establishing the incidence relation of A-share listed firms based on the linked senior management during the period of 2011-2016, this paper measures the fraud atmosphere of the linked company with each of the target company, then it examines the contagion of such fraud in the incidence relation. The findings show that the fraud atmosphere of the linked company will significantly encourage the fraud tendency of the target company, and the target company with stronger fraud habit is easier to be infected, while the target company without any record of fraud is immune to it. Further study finds that whether the linkage relationship is established by the chairman of the board or the general manager or other senior executives, it will certainly lead to the contagion of the fraud behavior. When the fraud behaviors are classified, it is found that information disclosure fraud and operation fraud are highly contagious, while leadership fraud has almost no contagion. After distinguishing the regulatory intensity faced by the target firms, it is found that the fraud behavior is more contagious when the regulatory intensity is weaker.

Key words: linked senior management; corporate fraud; fraud habit; contagion; regulatory intensity