TY - JOUR
T1 - Using Beneish model to detect corporate financial statement fraud in Greece
AU - Repousis, Spyridon
PY - 2016
Y1 - 2016
N2 - Purpose - This paper aims to investigate empirically the eight-variables Beneish M-model to identify occurrence of financial statement fraud or tendency to engage in earning manipulation. Design/methodology/approach - A data set of 25,468 companies (Société Anonyme and Limited Liability Companies) in Greece was analyzed during two-year period of 2011-2012. Financial statements of banks are excluded. Findings - The results showed that 8,486 companies or 33 per cent of the whole sample has a greater than-2.2 score, which is a signal that companies are likely to be manipulators. Also, for manipulators, results using F-distribution showed that days sales in receivable index (DSRI), asset quality index (AQI), depreciation index, selling, general and administrative expenses index (SGAI), total accruals to total assets index and leverage index (LVGI) are significant at 99 per cent confidence level in its effect on Beneish M-score. Also, there is a significant relationship between earning management, as expressed by Beneish M-score and each one of variables, DSRI, AQI, gross margin index, sales growth index, SGAI and LVGI. Most of all, DSRI explains 95.92 per cent of the variation in Beneish M-score in statistical terms. Practical implications - Results are important for banking system, because financial statements information influence credit decisions of banks. Debt agreements include terms based upon accounting numbers. Also, using Beneish Model, it is a cheap and easy way for examiners of possible fraudulent activity. Originality/value - To the best of the author's knowledge, there is a great lack of research in Greece, using Beneish model. There is only one more study using the Beneish model, examining only a few companies listed in Athens Stock Exchange during 1999-2000. Findings have also important implications not only for banks but also for users of Greek financial statement accounts, especially to investors, auditors, regulators, to taxation and other state authorities.
AB - Purpose - This paper aims to investigate empirically the eight-variables Beneish M-model to identify occurrence of financial statement fraud or tendency to engage in earning manipulation. Design/methodology/approach - A data set of 25,468 companies (Société Anonyme and Limited Liability Companies) in Greece was analyzed during two-year period of 2011-2012. Financial statements of banks are excluded. Findings - The results showed that 8,486 companies or 33 per cent of the whole sample has a greater than-2.2 score, which is a signal that companies are likely to be manipulators. Also, for manipulators, results using F-distribution showed that days sales in receivable index (DSRI), asset quality index (AQI), depreciation index, selling, general and administrative expenses index (SGAI), total accruals to total assets index and leverage index (LVGI) are significant at 99 per cent confidence level in its effect on Beneish M-score. Also, there is a significant relationship between earning management, as expressed by Beneish M-score and each one of variables, DSRI, AQI, gross margin index, sales growth index, SGAI and LVGI. Most of all, DSRI explains 95.92 per cent of the variation in Beneish M-score in statistical terms. Practical implications - Results are important for banking system, because financial statements information influence credit decisions of banks. Debt agreements include terms based upon accounting numbers. Also, using Beneish Model, it is a cheap and easy way for examiners of possible fraudulent activity. Originality/value - To the best of the author's knowledge, there is a great lack of research in Greece, using Beneish model. There is only one more study using the Beneish model, examining only a few companies listed in Athens Stock Exchange during 1999-2000. Findings have also important implications not only for banks but also for users of Greek financial statement accounts, especially to investors, auditors, regulators, to taxation and other state authorities.
KW - Beneish model
KW - Financial statement fraud
KW - Greece
UR - http://www.scopus.com/inward/record.url?scp=85002489683&partnerID=8YFLogxK
U2 - 10.1108/JFC-11-2014-0055
DO - 10.1108/JFC-11-2014-0055
M3 - Article
AN - SCOPUS:85002489683
SN - 1359-0790
VL - 23
SP - 1063
EP - 1073
JO - Journal of Financial Crime
JF - Journal of Financial Crime
IS - 4
ER -