The use of Beneish M-scores to reveal creative accounting: evidence from Slovakia

• Authors: Pavol Durana , Roman Blazek , Veronika Machova , Miroslav Krasnan

Abstracts

EN

Research background: In creative accounting, the primary goal of every enterprise is to increase and strengthen its market position. Over the years, manipulation of financial statements has also reached the territory of Central European countries, including the Slovak Republic. Therefore, an analysis was conducted to identify enterprises that handle accounting. This article focuses specifically on Sector A: agriculture, forestry, and fisheries. Purpose of the article: The aim of the article was to reveal the creative accounting practices of a sample of enterprises operating in the Slovak business environment in a sector using the Beneish model. Methods: The Beneish model was used to calculate the manipulation of enterprises? financial statements. Both variants, that is, the 5-parameter model and 8-parameter model, were used for the calculation. The results of these models were plotted using graphs and receiver operating characteristic (ROC) curves. Findings & value added: Based on the use of both variants of the Beneish model, it was proven that enterprises in the analyzed sector use the possibility of manipulating financial statements. The added value of the article is the detection of the use of creative accounting in a specific sector, which makes the study original in its application and space-time orientation.

Keywords

EN

Beneish model; creative accounting; earnings management; ROC curve

• Publisher: Instytut Badań Gospodarczych
• Journal: Equilibrium. Quarterly Journal of Economics and Economic Policy
• Year: 2022
• Volume: 17
• Issue: 2
• Pages: 481-510

Dates

published

2022

Contributors

author

Pavol Durana

• University of Zilina

• https://orcid.org/0000000159751958

author

Roman Blazek

• University of Zilina

• https://orcid.org/0000000280549540

author

Veronika Machova

• Institute of Technology and Business in Ceske Budejovice, Czechia

• https://orcid.org/0000000154796655

author

Miroslav Krasnan

• University of Zilina

• https://orcid.org/0000000331807694

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Identifiers

DOI

10.24136/eq.2022.017

Biblioteka Nauki

22443167