Articlehybrid2022

Earnings manipulation behavior in the banking industry of Bangladesh: the strategical implication of Beneish M-score model

Asia Khatun · Ratan Ghosh · Sadman Kabir

23 citations0/0 files storedArab Gulf Journal of Scientific Research

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Auditing, Earnings Management, Governance Corporate Governance and Financial Management Benford’s Law and Fraud Detection

Abstract

Purpose This study aims to determine the number of companies involved in earnings manipulation. Additionally, this study has empirically investigated the common manipulation items among the companies. Design/methodology/approach Bangladesh's listed commercial banks are selected as a sample for this study, and financial data from 2009 to 2018 were collected. The likely and nonlikely manipulator Beneish model (1999) divides the sample into two groups. Based on the M-score of the model, the banks are put into two groups. To identify the most influential variables, an independent samplet-test was done with the help of Statistical Package for Social Sciences (SPSS). Findings The findings show that banks in Bangladesh have an unstable trend in making manipulated financial reports. Results of thet-test reveal that overstating revenues, increasing intangible assets, lessening cost and accruals are the most appealing items for preparing a fraudulent financial report. The findings of this research work will help the investors take the right decision having the idea of manipulation in the banking sector of Bangladesh. Originality/value In the presence of many irregularities in the banking sector Bangladesh, very few studies have been carried out in forensic accounting and fraudulent financial reporting practices. Much research has focused on earnings management techniques. This research specifically focuses on identifying earnings manipulation in financial statements for micro-level variables like accounting accruals, intangible assets, etc. This will help policy-makers and financial statement readers to be proactive while reading financial statements and taking any investment decision.

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References

1991Earnings Management During Import Relief Investigations 1985The effect of bonus schemes on accounting decisions 1999The Detection of Earnings Manipulation 2016Fraud detection using fraud triangle risk factors 2014Disclosure of Corporate Governance Structure and the Likelihood of Fraudulent Financial Reporting 2016Using Beneish model to detect corporate financial statement fraud in Greece 2016Detecting Financial Statement Frauds in Malaysia: Comparing the Abilities of Beneish and Dechow Models 2015Corporate frauds in India – perceptions and emerging issues

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