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Testing firm-level data quality in China against Benford’s Law

Yasheng Huang, Zhiyong Niu and Clair Yang

Economics Letters, 2020, vol. 192, issue C

Abstract: The authenticity of China’s economic data has long been questioned. We use a new statistical method, Benford’s test, to evaluate data quality of the Chinese Industrial Census (CIC). We show that the method is effective to uncover data irregularities. Based on predicted industrial output by variables that are less manipulatable, such as employment and electricity, we further demonstrate that firms of different ownership types display different behavior in terms of the direction of data manipulation. We find no conclusive evidence of data manipulation by state-owned enterprises (SOEs), whereas private firms tend to under-report performance.

Keywords: Data quality; China; Benford’s Law (search for similar items in EconPapers)
JEL-codes: C81 P20 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.econlet.2020.109182

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