Financial Statement Manipulation: A Beneish Model Application

Murat Erdoğan and Eda Oruç Erdoğan

A chapter in Contemporary Issues in Audit Management and Forensic Accounting, 2020, vol. 102, pp 173-188 from Emerald Group Publishing Limited

Abstract: The purpose of the financial statements is to present the situations of the enterprises, such as the financial situation, results of operations, etc., in the decision-making processes to the related parties in a suitable, comparable, and realistic manner. In recent years, professional frauds in enterprises have been seriously reflected in financial statements and this has resulted in the manipulation of financial information. In this study, we aim to determine financial firms, which might manipulate the financial information, by applying the Beneish model and then determine the financial indicators of possible financial statement manipulation, using logistic regression. For this purpose, companies included constantly in Borsa İstanbul-50 (BIST-50) 2015, 2016, and 2017 were examined. After the enterprises which have the possibility of financial manipulation are determined by the Beneish model, it is understood that there is a positive relationship between the probability of manipulating financial information and the Asset Quality Index and Sales, general and administrative expenses index.

Keywords: Fraud; financial manipulation; auditing; accounting; Beneish model; logistic regression; M40; M41; M42 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:csefzz:s1569-375920200000102014

DOI: 10.1108/S1569-375920200000102014

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