Identification of the Factors Determining the Number of Industrial Companies Traded at BIST that Declare False Financial Statements: Poisson Hurdle Model

Gökçe Tekin Turhan
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Gökçe Tekin Turhan: İstanbul Nişantaşı Üniversitesi

International Journal of Applied Economic and Finance Studies, 2020, vol. 5, issue 1, 15-27

Abstract: Financial information is important for all companies and organizations. Decision makers such as investors, customers and banks need accurate financial data. When this financial information is misrepresented or fails to meet the needs in a transparent and accurate way, problems arise both ethically and financially. Companies that are obliged to present their financial information in a transparent and complete manner may occasionally choose to misrepresent their data and resort to manipulation. Proper functioning of financial markets requires that financial information is understandable, sufficient, reliable and timely. For current and potential investors the most important source of information about companies is financial statements. Investors, who make financial decisions by relying on inaccurate information may be dragged into major economic losses. A manipulation or misrepresentation of these statements will prevent public savings from participating widely and effectively in financial markets. The study aims to determine the factors that affect the number of industrial companies traded at BIST and present false financial statements. In order to achieve this, zero-inflated count data is analyzed with Poisson Hurdle Model in order to determine the effective financial ratios.

Keywords: False financial statements; financial information manipulation; Poisson Hurdle model; count data (search for similar items in EconPapers)
Date: 2020
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