China’s second accounting scandal in less than a week is underscoring concern over lax corporate governance at some of its fastest-growing companies.
TAL Education Group, a tutoring business whose success turned founder Zhang Bangxin into one of China’s richest people, delivered the latest bombshell on Tuesday after saying a routine internal audit found an employee had inflated sales by forging contracts. TAL's American depositary receipts sank as much as 18 percent in late U.S. trading.
The sell-off follows the 83 percent slump in Nasdaq-listed Luckin Coffee Inc. since the company announced that its chief operating officer and some underlings may have fabricated billions of yuan in sales for 2019. Accounting firm Ernst & Young later said it discovered the fabrications when it audited the firm’s financial statements. Trading in the ADRs was suspended Tuesday.