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The Impact of Elections on the Quality of Financial Statements in Municipally Owned Entities

Francesco Capalbo (), Luca Galati, Claudio Lupi and Margherita Smarra ()

Economics & Statistics Discussion Papers from University of Molise, Department of Economics

Abstract: Misleading financial reports are generally considered damaging events for corporations and society at large. Drawing on Cooper, Dacin and Palmer (2013), this paper complements existing research with an example in which context, intended as distribution of power, concurred to explain accounting data manipulation. By applying Benford's Law to look for signs of manipulated financial statements published by Italian Municipally Owned Entities operating in utility industries, this study reveals red flags of financial misstatements concentrated during election periods. This implies that internal/external auditors need to pay more attention to the quality of accounting data in these crucial periods and specific environments.

Keywords: Quality of financial statements; elections; public sector accounting; power; Benford's Law (search for similar items in EconPapers)
JEL-codes: C12 D72 M41 (search for similar items in EconPapers)
Pages: 43
Date: 2022-01-24
New Economics Papers: this item is included in nep-acc
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