Benford's law

Analyzing a decade of financial data

Fatima A. Alali, Silvia Romero

Research output: Contribution to journalArticleResearchpeer-review

5 Citations (Scopus)

Abstract

This study uses a decade of financial accounting data to examine if and how they depart from Benford's Law. Using a large sample of U.S. public companies, we conduct an analysis of the first-two digits of data items generally used in research to measure total accruals and discretionary accruals and where fraud, restatements, and enforcement actions are revealed. We break down a decade of data into six subperiods; pre-SOX Period (2001), SOX 1 Period (2002-2003), SOX 2 Period (2004-2006), SOX 3 Period (2007), Crisis 1 Period (2008), and Crisis 2 Period (2009-2010). We find different indicators of manipulation during the periods studied, as well as differences between small and big companies and companies audited by Big 4 and non-Big 4 firms.

Original languageEnglish
Pages (from-to)1-39
Number of pages39
JournalJournal of Emerging Technologies in Accounting
Volume10
Issue number1
DOIs
StatePublished - 1 Jan 2013

Fingerprint

Industry
Benford's law
Financial data
Fraud
Restatements
Manipulation
Discretionary accruals
Breakdown
Accounting data
Enforcement
Big 4
Accruals
Financial accounting

Keywords

  • Benford
  • Crisis
  • Manipulation
  • Post-SOX
  • Pre-SOX

Cite this

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Benford's law : Analyzing a decade of financial data. / Alali, Fatima A.; Romero, Silvia.

In: Journal of Emerging Technologies in Accounting, Vol. 10, No. 1, 01.01.2013, p. 1-39.

Research output: Contribution to journalArticleResearchpeer-review

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