Benford’s Law and an Analysis in Istanbul Stock Exchange (BIST)

Karavardar, Alper

doi:10.5539/ijbm.v9n4p160

Cited by 12 publications

(10 citation statements)

References 14 publications

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“…There is no miracle to detect fraud, but it is a useful test and a potential indicator of possible further investigations in detecting fraud in data sets (Goulding, 2013). It is an effective analytical tool for detecting irregularities and deviations in the analysis of data, for example, in the company businesses (Karavardar, 2014).…”

Section: Methodsmentioning

confidence: 99%

Do the Financial Statements of Listed Companies on the Ljubljana Stock Exchange Pass the Benford’s Law Test?

Omerzu¹,

Kolar²

2018

IBR

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Currently, we need to think about the risks in using the financial statements. Abroad, for a long time, in the detection of irregularities in the financial statements, Benford's law test has been used, which is a very simple, objective and efficient digital analysis that can help identify controversial areas. Since, in Slovenia, its use is still unknown and in practice, and it is rarely used, we checked whether the financial statements of Slovenian companies listed on the Ljubljana Stock Detecting fraud and other irregularities in accounts dates back to the 13th century, when bookkeeping began in Europe. The pioneer of bookkeeping is Luca Pacioli, who in the 14th century pointed out the importance of

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Section: Methodsmentioning

confidence: 99%

Do the Financial Statements of Listed Companies on the Ljubljana Stock Exchange Pass the Benford’s Law Test?

Omerzu¹,

Kolar²

2018

IBR

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“…Zgela (in 2011) analysis of DAX 2 percentage changes over 10 years [2001][2002][2003][2004][2005][2006][2007][2008][2009][2010][2011] led to the conclusion that DAX values were not in accordance with the FSD Law [18]. More recently, the Istanbul Stock Exchange (BIST) attracted some attention: Karavardar (in 2014) [19] found no disagreement with BL for the monthly returns (over 26 years), while Cinko (2014) found no disagreement for the daily returns (over 23 years) [20].…”

Section: Introductionmentioning

confidence: 99%

Benford’s law first significant digit and distribution distances for testing the reliability of financial reports in developing countries

Shi

Ausloos

Zhu

2018

Physica A: Statistical Mechanics and its Applications

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We discuss a common suspicion about reported financial data, in 10 industrial sectors of the 6 so called "main developing countries" over the time interval [2000][2001][2002][2003][2004][2005][2006][2007][2008][2009][2010][2011][2012][2013][2014]. These data are examined through Benford's law first significant digit and through distribution distances tests.It is shown that several visually anomalous data have to be a priori removed. Thereafter, the distributions much better follow the first digit significant law, indicating the usefulness of a Benford's law test from the research starting line. The same holds true for distance tests. A few outliers are pointed out.

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“…The author pointed to specific examples of financial market manipulation, such as misleading information to influence investment values or erroneous transaction volumes. There have been other attempts in the past literature to detect fraudulent financial data using statistical analyses (Luna, Palshikar, Apte, & Bhattacharya, 2018;Stack, 2015;Beneish, 1999;Aggraval and Dhami, 2020;Karavardar, 2014;MacCarthy, 2017). Karavardar (2014) studied the Istanbul Stock Exchange, applied Benford's law, and showed the compliance of the indices with the expected logarithmic law for the first and second digits and the first two first digits.…”

Section: Financial Market Manipulationmentioning

confidence: 99%

“…There have been other attempts in the past literature to detect fraudulent financial data using statistical analyses (Luna, Palshikar, Apte, & Bhattacharya, 2018;Stack, 2015;Beneish, 1999;Aggraval and Dhami, 2020;Karavardar, 2014;MacCarthy, 2017). Karavardar (2014) studied the Istanbul Stock Exchange, applied Benford's law, and showed the compliance of the indices with the expected logarithmic law for the first and second digits and the first two first digits. A deviation from the logarithmic law does not always indicate fraud.…”

Section: Financial Market Manipulationmentioning

confidence: 99%

“…Benfordness -compliance with the law -can be measured by applying financial data with a geometric trend and is characterized by the absence of minima and maxima. BL is a common practice and has been widely used in various disciplines, such as financial markets (Karavardar, 2014), epidemiology (Sambridge & Jackson, 2020;Farhadi, 2020;Farhadi & Lahooti, 2021a, 2021b, finance, and accounting (see Durtschi, Hillison, & Pacini, 2004), political science (Roukema, 2014), and compliance (Deleanu, 2017). The body of knowledge provides several tests to assess such agreement.…”

Section: Benford's Lawmentioning

confidence: 99%

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In Data We Trust: Proving Market Manipulation on the Tehran Stock Exchange

Farhadi¹,

Lahooti²

2022

IJBM

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The Iranian financial markets play an essential role in the country's economic development. In 2019 and 2020, ordinary traders were encouraged by the political authorities to invest in state-owned enterprises. Citizens who invested in Tehran Stock Exchange (TSE) indices routinely complain that the volatile market performance has wiped out their capital and savings. In this study, the reliability of intraday transaction data for 341 stocks listed on the TSE was examined. Our critical objective is to identify fraud on the TSE. The authors applied Benford's first and second digit laws to detect irregularities in financial data based on three goodness of fit tests. The authors found overwhelming evidence of the presence of market manipulation on the TSE. We found that 46 percent of the companies listed on the TSE did not adhere to the law of the first digit. A thorough analysis of compliance with the second digit revealed a similar pattern. Given the severe impact of trade restrictions imposed by the 2018 US sanctions and the substantial increase in Iran's public debt burden, the TSE has become a major source for offsetting the government's deficit by conducting IPOs of state-owned companies. Market manipulation in Iran appears to be motivated by the government's urgent need for fresh capital and its waste. It would be a common misconception to trust the TSE's data.

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Benford’s Law and an Analysis in Istanbul Stock Exchange (BIST)

Cited by 12 publications

References 14 publications

Do the Financial Statements of Listed Companies on the Ljubljana Stock Exchange Pass the Benford’s Law Test?

Do the Financial Statements of Listed Companies on the Ljubljana Stock Exchange Pass the Benford’s Law Test?

Benford’s law first significant digit and distribution distances for testing the reliability of financial reports in developing countries

In Data We Trust: Proving Market Manipulation on the Tehran Stock Exchange

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