IDEAS home Printed from https://ideas.repec.org/a/taf/applec/45y2013i1p135-140.html
   My bibliography  Save this article

Applying digital analysis to detect fraud: an empirical analysis of US marine industry

Author

Listed:
  • Chin Hsien Hsieh
  • Fengyi Lin

Abstract

Firms have tendency to window dress their financial statements by reporting earnings to achieve reference points represented by N × 10 -super-k . Such practice of reporting rounded earnings is likely due to (1) firms may believe that investors perceive a reported earnings of $1.99 million to be significantly less than $2.0 million; and/or (2) contracts between firms and stakeholders are likely to express earnings in round numbers. Auditors have employed more sophisticated digital analysis such as Benford's law, as part of their fraud detection processes. This study investigated the window dressing behaviour among firms in the US marine industry. The findings of the study suggest that window dressing is a significant practice among the marine firms. However, the extent of the pervasiveness of such behaviour is less severe among marine firms than among all publicly-listed firms in the entire US economy, suggesting that the quality of financial statements of marine companies is higher than the overall population of public companies.

Suggested Citation

  • Chin Hsien Hsieh & Fengyi Lin, 2013. "Applying digital analysis to detect fraud: an empirical analysis of US marine industry," Applied Economics, Taylor & Francis Journals, vol. 45(1), pages 135-140, January.
    • Handle: RePEc:taf:applec:45:y:2013:i:1:p:135-140
    DOI: 10.1080/00036846.2011.605759
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2011.605759
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2011.605759?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Yaping Wang & Shaw Chen & Bing-Xuan Lin & Liansheng Wu, 2008. "The frequency and magnitude of earnings management in China," Applied Economics, Taylor & Francis Journals, vol. 40(24), pages 3213-3225.
    2. Burgstahler, David & Dichev, Ilia, 1997. "Earnings management to avoid earnings decreases and losses," Journal of Accounting and Economics, Elsevier, vol. 24(1), pages 99-126, December.
    3. Francis, J & Olsson, P & Oswald, DR, 2000. "Comparing the accuracy and explainability of dividend, free cash flow, and abnormal earnings equity value estimates," Journal of Accounting Research, Wiley Blackwell, vol. 38(1), pages 45-70.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dominique Geyer & Christoph Drechsler, 2014. "Detecting Cosmetic Debt Management Using Benford's Law," Post-Print hal-01059758, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bert Scholtens & Feng‐Ching Kang, 2013. "Corporate Social Responsibility and Earnings Management: Evidence from Asian Economies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 20(2), pages 95-112, March.
    2. Olivier Vidal, 2011. "De l'importance des seuils en comptabilité," Post-Print hal-00594834, HAL.
    3. Olivier Vidal, 2011. "Comment mesurer les irrégularités de distribution des résultats publiés ?," Post-Print hal-02104086, HAL.
    4. Lucie Courteau & Jennifer L. Kao & Yao Tian, 2013. "Does Accrual Management Impair the Performance of Earnings-Based Valuation Models?," BEMPS - Bozen Economics & Management Paper Series BEMPS12, Faculty of Economics and Management at the Free University of Bozen.
    5. Olivier Vidal, 2011. "Comment mesurer les irrégularités de distribution des résultats publiés ?," Post-Print hal-00594840, HAL.
    6. Rachappa Shette, 2018. "Earnings Management to Avoid Losses: Evidence from India," Working papers 255, Indian Institute of Management Kozhikode.
    7. Olivier Vidal, 2011. "De l'importance des seuils en comptabilité," Post-Print hal-00650591, HAL.
    8. Olivier Vidal, 2010. "Gestion du résultat pour évite de publier une perte : les montants manipulés sont-ils marginaux ?," Post-Print hal-00840910, HAL.
    9. Lucie Courteau & Jennifer L. Kao & Yao Tian, 2015. "Does Accrual Management Impair the Performance of Earnings-Based Valuation Models?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 42(1-2), pages 101-137, January.
    10. Frank D. Hodge & Roger D. Martin & Jamie H. Pratt, 2006. "Audit Qualifications of Income†Decreasing Accounting Choices," Contemporary Accounting Research, John Wiley & Sons, vol. 23(2), pages 369-394, June.
    11. Gerry Gallery & Emerson Cooper & John Sweeting, 2008. "Corporate Disclosure Quality: Lessons from Australian Companies on the Impact of Adopting International Financial Reporting Standards," Australian Accounting Review, CPA Australia, vol. 18(3), pages 257-273, September.
    12. Kooyul Jung & Boyoung Kim & Byungmo Kim, 2009. "Tax Motivated Income Shifting and Korean Business Groups (Chaebol)," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(5‐6), pages 552-586, June.
    13. Magni, Carlo Alberto, 2009. "Splitting up value: A critical review of residual income theories," European Journal of Operational Research, Elsevier, vol. 198(1), pages 1-22, October.
    14. Niels Johannesen & Thomas Tørsløv & Ludvig Wier, 2016. "Are less developed countries more exposed to multinational tax avoidance? Method and evidence from micro-data," WIDER Working Paper Series 010, World Institute for Development Economic Research (UNU-WIDER).
    15. Abhijit Barua & Joseph Legoria & Jacquelyn Sue Moffitt, 2006. "Accruals Management to Achieve Earnings Benchmarks: A Comparison of Pre‐managed Profit and Loss Firms," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(5‐6), pages 653-670, June.
    16. Karel Janda, 2019. "Earnings Stability and Peer Company Selection for Multiple Based Indirect Valuation," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 69(1), pages 37-75, February.
    17. Craig J. Chapman & Thomas J. Steenburgh, 2011. "An Investigation of Earnings Management Through Marketing Actions," Management Science, INFORMS, vol. 57(1), pages 72-92, January.
    18. Li, Shaomin & Selover, David D. & Stein, Michael, 2011. ""Keep silent and make money": Institutional patterns of earnings management in China," Journal of Asian Economics, Elsevier, vol. 22(5), pages 369-382, October.
    19. Ludovic Vigneron & Yves Mard, 2016. "Earnings management across publicly traded and privately held French SMEs," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 29(3), pages 416-440.
    20. Waleed Khalid & Kashif Ur Rehman & Muhammad Kashif, 2019. "The Impact of Merger and Acquisition Firms on Stock Market Bubble," Global Regional Review, Humanity Only, vol. 4(1), pages 335-342, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:45:y:2013:i:1:p:135-140. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.