Abstract: Enterprise fraud is the key to the long-term development of family businesses, but the prior research ignores the role of the second generation of kinship. Based on the empirical data of listed family businesses in China from 2003 to 2019, this paper investigates the impact of the second generation of kinship on the enterprise fraud. Results show that compared with the second generation of distant relatives, the second generation of close relatives has a negative effect on enterprise fraud. The digital transformation has a negative moderating effect on the above-mentioned relationship, the economic policy uncertainty has a positive moderating effect on the relationship. Heterogeneity analysis show that compared with business fraud and leaders′ fraud, the second generation of close relatives has a negative effect on governing information disclosure fraud, and on general fraud, too. Furthermore, the second generation of close relatives has a negative effect on the probability of being checked out and the tendency of enterprises fraud. The study enriches the literature on the second generation of kinship of the family business and the enterprise fraud, and provides empirical evidence for a better understanding of how the second generation of kinship of the family business affects strategic decision-making.