Detection of Financial Statements Manipulation Using the Beneish M-Score: The Case of Companies Recently Charged by SEC.
Detection of Financial Statements Manipulation Using the Beneish M-Score: The Case of Companies Recently Charged by SEC.

Author(s): Desislava Petkova
Subject(s): Economy, Accounting - Business Administration
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: earnings manipulation; Beneish M-score model; financial ratios; fraudulent reporting
Summary/Abstract: The Beneish M-score model is a useful tool for identifying the potentially fraudulent behaviour of a company that could lead to misstated financial data. This paper uses the detective model to determine if and when warning signs of manipulation were identifiable before the companies were officially charged with fraud by U.S. SEC. Data used in the analysis are the 10-K reports from the U.S. SEC Edgar database. The study analyses two companies involved in financial scandals in 2021 and showsthat the model can be used to catch manipulative actions in advance under the condition that other factors should be considered. To further deepen the analysis of the model’s mechanisms, the paper recommends concentrating on fewer fraudulent cases and entering into details for each business.

• Details
• Contents