Valeant pharmaceuticals fraud

Maude Belanger, Charles Hounwanou Dossa, Sanvee Menah Koffi, Isabelle Sauvageau and Nadia Smaili

Journal of Financial Crime, 2024, vol. 32, issue 3, 545-557

Abstract: Purpose - The aim of this study is to examine the patterns of fraud present in Valeant’s 2014 and 2015 financial statements and determine through a risk management analysis whether these frauds could have been prevented. This analysis provides the opportunity to more effectively prevent financial statement fraud. Design/methodology/approach - Data were collected from Valeant pharmaceuticals annual reports, financial statements reports and financial authority documentation. Based on these documents, this paper analyzes the different fraud schemes and investigate whether fraud could have been detected earlier by governance actors. In particular, this paper examines the firm’s financial statements three years before the fraud was detected by the Securities and Exchange Commission. Findings - The analysis of financial statements reveals few clues and no alarming red flags three years before detection of the fraud. However, financial statement analyses were complex because of the many acquisitions the firm made in the years before. Originality/value - This paper aims to contribute to the literature on fraud by investigating a case of financial statement fraud.

Keywords: Financial statement fraud; Fraud triangle; Real activities manipulation; Detection of financial fraud (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfcpps:jfc-05-2024-0150

DOI: 10.1108/JFC-05-2024-0150

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