Earnings management in global background

Straková, Lenka

doi:10.1051/shsconf/20207401032

Cited by 18 publications

(7 citation statements)

References 17 publications

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“…The researchers identify various methods to reveal the implementation of creative accounting from basic financial analysis to statistical methods, implementation of ethic principles or software applications to direct detection of financial books´ manipulation. Strakova (2020) summed up models focused on revealing creative accounting into three groups.…”

Section: Methodsmentioning

confidence: 99%

“…If we focus on the theoretical definition of the term entrepreneurship, whether we consider the legal, economic, or social definition of this term, we are constantly considering the term profitachieving the profit. Most of the modern approaches to this issue also emphasize the factor of achieving stakeholders´ (internal or external) satisfaction, or society, but the term achieving of the profit is still present in these definitions (Strakova, 2020. From this knowledge, we are able to deduce that profit is the main aim of entrepreneurship and that is why many of the entrepreneurs are focusing on the highest rate of profit.…”

Section: Introductionmentioning

confidence: 99%

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Could globally used Beneish M-score predict the manipulation of the accounting statements in the Slovak republic?

Zvaríková

Kovalová

2021

SHS Web Conf.

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Research background: Globalization is characteristic by many companies which are doing their business worldwide in various tax policies, so they are able to use the possibilities of creative accounting for their own benefit. And although the term creative accounting is concerned mainly with multinational companies, it is not an unknown technique also for local companies. Purpose of the article: The PwC’s Global Economic Crime and Fraud Survey proved that economic crime is constantly evolving worldwide. At present, there is a huge number of frauds, which include corruption, misappropriation of assets, or fraudulent reporting. These papers are focused only on accounting fraud and creative accounting as the way to adjust accounting books and reports. Methods: The aim of the papers is to analyse the detection ability of the Beneish M-score model in the specific condition of the Slovak republic. These specific conditions consider tax minimization as the key factor for creative accounting implementation. The analysis was made with a Slovak company that was legally convicted of intentional manipulation of the accounting statements. Findings & Value added: The consideration of the specific condition in M-score for Slovak republic showed the best detection ability to reveal the frauds. As our study reveals, reduced M – score5 was unreliable in the condition of the Slovak republic and although Beneish consider 3 indicators as redundant it seems that in the condition of the Slovak republic it is important to carefully consider their implementation.

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Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Could globally used Beneish M-score predict the manipulation of the accounting statements in the Slovak republic?

Zvaríková

Kovalová

2021

SHS Web Conf.

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“…The authors state that corruption has a very strong effect on earnings management and that controlling the level of corruption in their countries can discourage managers of the companies from earnings management. Several studies dealing with the issue of earnings management and its detection have also been published by authors from Slovakia, such as [1][2][3][4][7][8][9][16][17][18][19][20].…”

Section: Literature Reviewmentioning

confidence: 99%

“…However, these facts also show that earnings management is successful when it is invisible and therefore difficult to detect and quantify. To this end, several studies and models have been developed, the main goal of which is to identify companies that implement earnings management [7,8]. In this study, we focus on the triangulation of methods, or models, that can be used to detect earnings management.…”

Section: Introductionmentioning

confidence: 99%

Detecting the manipulation of earnings in the company: triangulation of methods

Švábová

2021

SHS Web of Conf.

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Research background: Earnings management is a current topic in the world of financial management. It can be considered as a global phenomenon of today’s modern approach to the reporting of accounting information and related accounting decisions of managers, which may affect the overall results of financial statements. Many companies use earnings management as a tool to maintain stable profit growth or prevent “red numbers” from appearing in financial statements that are not beneficial to the company. Purpose of the article: Understanding what earnings management represents and why it is performed is essential for users of a company’s financial statements. However, detecting manipulation in companies is not easy, because Earnings management is successful if it is invisible. Therefore, statistical models are usually used to detect these practices. The aim of this paper is to show that the use of several methods strengthens the results obtained and is more probably to reveal possible manipulation of earnings in companies. Methods: In this study, we used triangulation of methods to detect Earnings management in companies: one of the most frequently used model in this area, Beneish model, but also the model for Slovak companies M-score SVK, which was created under the inspiration of the Beneish model and finally, the model of the company’s propensity score of manipulation. Findings & Value added: The study provides a global view of the possibilities of applying these three models to detect manipulation in the company. The idea of triangulation of methods is based on the consideration that if all the methods detect possible manipulation, it is very likely that it actually happens in the company.

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“…Then, current studies in the research field are described, especially those that cover the recent incentive of creative accounting on the developed markets in comparison to the solved issue in emerging markets. Strakova (2020) comprehensively sums up models related to the detection of creative accounting. The study divides the models into three approaches: accrual-based earnings management, real earnings management and a combined model of earnings management (Figure 1).…”

Section: Literature Reviewmentioning

confidence: 99%

Creative Accounting as an Apparatus for Reporting Profits in Agribusiness

Blazek

Ďurana

Valášková

2020

JRFM

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The economic results of a company are an important tool for many entities, e.g., for internal entities as well as for external entities. As the economic results of a company are often the only source of information that informs the company’s partners about the managerial activities of their company, it is necessary to present these economic results using real numbers. However, companies prefer to achieve better results by applying the principles of creative accounting, which leads to improved economic values being shown to be achieved during an accounting period. The purpose of this article is to apply models that have been developed to detect creative accounting, which occurs under conditions that help enterprises to adjust their financial statements and tax bases and involves using creative accounting techniques to become competitive or to be able to take advantage of deductions. These models were applied to the Slovak Republic’s agriculture, forestry, and fishing sector (sector A), which is highly affected by earnings manipulation. This article provides a numerical expression of companies, which were previously, with some probability level, involved in conducting financial statement manipulation. Subsequently, the results that were obtained have been displayed using receiver operating characteristic (ROC) curves. The outputs of the analysis show that a large proportion of the companies in this sector tend to use creative accounting, which is not only harmful for entrepreneurs and their business partners in sector A, but also for the Slovak Republic at large, as the Slovak government cannot determine whether the reported accounting results reflect a company’s real financial situation.

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Earnings management in global background

Cited by 18 publications

References 17 publications

Could globally used Beneish M-score predict the manipulation of the accounting statements in the Slovak republic?

Could globally used Beneish M-score predict the manipulation of the accounting statements in the Slovak republic?

Detecting the manipulation of earnings in the company: triangulation of methods

Creative Accounting as an Apparatus for Reporting Profits in Agribusiness

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