Based on the non-penalty market regulations represented by inquiry and attention letters, and the mixed shareholders governance mechanism formed by checks and balances between state-owned equity and non-state-owned equity, using the data of non-financial listed companies in Shanghai and Shenzhen stock markets from 2014 to 2020, the study investigates the effective ways to curb the frequent violation of the company, we find that non-penalty market regulations and mixed shareholders governance can curb the trend of corporate fraud, and there is a complementary relationship between the two. Furthermore, this complementary relationship is mainly derived from the positive adjustment effect of mixed shareholders governance on the regulatory effect of attention letters, the intermediary effect of mixed shareholders governance on the regulatory effect of inquiry and attention letters, and the intermediary effect of inquiry and attention letters on the mixed shareholders governance effect. In addition, we document more obvious effects when the firms face stronger non-penalty market regulations, such as receiving more or longer regulation letters, and the frequency of receiving regulation letters has a stronger regulatory effect on the trend of corporate fraud; quasi-natural experiment analysis shows that the revised “Measures on Stock Exchange” in 2017 can enhance the complementary relationship between the two; non-state-owned property right, efficient judicial and administrative environment and managers’ legal background can strengthen the supervision functions of non-penalty market regulations and mixed shareholders governance. Moreover, the reduction of corporate fraud brought about by non-penalty market regulations and mixed shareholders governance can further improve investor protection. The conclusions help to understand the internal logic of the institutional synergy of front-line financial regulation and mixed ownership promoting the effective operation of the capital market, and provide new approach for decision-makers on preventing corporate fraud and improving the quality of listed companies.