Advances in Economics, Management and Political Sciences

- The Open Access Proceedings Series for Conferences


Proceedings of the 2023 International Conference on Management Research and Economic Development

Series Vol. 22 , 13 September 2023


Open Access | Article

Identifying Financial Report Frauds

Chengyue Wang * 1 , Liangwei Lyu 2 , Shuo Zhang 3
1 University of Michigan
2 One Direction Academy
3 The University of Hong Kong

* Author to whom correspondence should be addressed.

Advances in Economics, Management and Political Sciences, Vol. 22, 9-17
Published 13 September 2023. © 13 September 2023 The Author(s). Published by EWA Publishing
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Citation Chengyue Wang, Liangwei Lyu, Shuo Zhang. Identifying Financial Report Frauds. AEMPS (2023) Vol. 22: 9-17. DOI: 10.54254/2754-1169/22/20230281.

Abstract

Misreporting numbers in a company’s financial statements is not negligible, as manipulations will not reflect a reliable disclosure. With financial manipulation becoming more and more regular, it is obvious that solving financial manipulation is an issue that needs to be addressed gently. It becomes a necessity to find techniques or mechanisms that can effectively identify the potential of financial report fraud, increase the credibility of the corporation and boost the confidence of investors. In this paper, we argue that the M-score and F-score as two reliable tools for predicting the possibilities of financial manipulations. In this essay, we will introduce the background and principles of these two mechanisms, then verify their reliability and effectiveness on sample Us-listed Chinese companies, which include those associated with financial report frauds in the past. In addition, we will lay out our discovery and full verifying procedure to help readers have a better understanding of our research and perspectives.

Keywords

financial manipulations, US-listed Chinese companies, financial report frauds

References

1. Kniepmann, Clay M. “Fraud Triangle.” Corporate Finance Institute, 29 Nov. 2022, https://corporatefinanceinstitute.com/resources/accounting/fraud-triangle/.

2. Turner, Jerry L., et al. An Analysis of the Fraud Triangle. Jan. 2003, https://www.researchgate.net/profile/Theodore-Mock/publication/237777981_An_Analysis_of_the_Fraud_Triangle/links/00b4952769aa39a5fe000000/An-Analysis-of-the-Fraud-Triangle.pdf.

3. Beneish, Messod D., et al. “Fraud Detection and Expected Returns.” SSRN, 5 Feb. 2012, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1998387.

4. Dechow, Patricia, et al. “Predicting Material Accounting Misstatements.” SSRN, 30 June 2007, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=997483.

5. Keune, M. , & Johnstone, K. M. . SSRN-Inferences from the Revelation of Previously Uncorrected Accounting Misstatements by Marsha Keune, Karla Johnstone.

Data Availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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Volume Title
Proceedings of the 2023 International Conference on Management Research and Economic Development
ISBN (Print)
978-1-915371-87-4
ISBN (Online)
978-1-915371-88-1
Published Date
13 September 2023
Series
Advances in Economics, Management and Political Sciences
ISSN (Print)
2754-1169
ISSN (Online)
2754-1177
DOI
10.54254/2754-1169/22/20230281
Copyright
13 September 2023
Open Access
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

Copyright © 2023 EWA Publishing. Unless Otherwise Stated