The level of value-destroying companies in Asia, defined as offering poor return on investors’ money, has risen to a record level of 38 percent, CLSA analysts said in the report, highlighting the rising risks posed to investors.High levels of insider share ownership, sometimes weak corporate disclosure rules and varying accounting standards all contribute to Asia’s rising levels of companies whose stocks can be suddenly wiped out, the report said.

“In the current low-return environment, avoiding such accounting blow-ups overwhelms all other considerations,” CLSA said.

CLSA analysed 100 cases of alleged accounting manipulation or bankrutpcy-related blow-ups to identify common factors that investors could use to try and avoid investment in similar companies.

The report comes amid growing investor scrutiny of Chinese companies after months of market turmoil and renewed attention from short-sell research firms hoping to sniff out corporate fraud in Asia.

The report also comes the week after ratings agency Moody’s fought a landmark appeal in Hong Kong against the city’s financial regulator over a similarly-titled July 2011 ‘Red Flags’ report that raised concerns about corporate governance at 49 Chinese companies.

CLSA’s owner, China’s Citic Securities Co Ltd, is itself under investigation by Chinese authorities following investigations into dramatic stock market fluctuations.