This chapter introduces the definition of financial fraud and financial distress, together with their measurement indicators commonly used in academic papers. It further examines the relationship between distress and fraud, which is a theoretical foundation for subsequent chapters. The definition of financial fraud stems from legal frameworks, emphasizing material misstatements, intentional deception, and resultant economic losses, with varying judicial interpretations across jurisdictions. This book examines three hierarchical categories of financial fraud in Chinese listed companies: CSRC-penalized violations, material misrepresentations with substantial fines, and media-disclosed fraudulent activities. These three categories form the foundational financial fraud datasets for our empirical analyses.