Investor Reaction to the Discovery of Accounting Fraud: The Period from the Discovery of the Fraud to the Completion of the Correction

Ahmad, Syed Raziuddin; Senan, Nabil Ahmed Mareai; Ali, Ijaz; Ali, Kashif; Khan, Imran; Baig, Asif

doi:10.36941/ajis-2021-0163

Cited by 3 publications

(1 citation statement)

References 17 publications

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“…Strategic initiatives for corporate fraud and earning management control should work together to devise legal and regulatory friction measures to detect and prevent fraud and earning management practices where possible (Sa'id & Azmi, 2020). Fraud is a monster and addressing this economic monster is a holistic response integrating fraud detection, prevention and redress, underpinned by strong determination and understanding of corporate inherent risks (Ahmad et al, 2021;Mishra et al, 2022).…”

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confidence: 99%

Corporate Fraud, Earnings Management and Firm Value: Empirical Application of M-Scores

Folajimi,

Aguguom,

Ajah

et al. 2023

J. of Law and Sust. Develop.

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Background: Corporate fraud and earnings management have been controversial and discussed extensively in the literature, as companies consider the practices strategic and creative to keep their companies afloat and sustain a desired firm value. While this unethical practice has remained illegal, unethical and a global concern, the trajectory to higher incentives by executives to insider dealings to keep the stock price attractive by managers is unacceptable, this study provides new insight and implications of corporate fraud and earnings management on firm value. Objective: This paper investigates the effect of corporate fraud and earnings management on firm value from the perspective of the application of Beneish M-Score manipulation and probability index as indicators to detect corporate fraud and earnings management on Tobin’s Q as a surrogate of firm value The main aim is to establish the consequence of corporate fraud and earnings management on firm value and highlights the forms of corporate fraud and earnings management, stakeholders concerns and unattractiveness of fraud corporate in whatever capacity. Method: Using descriptive statistics and inferential analysis, the study provides evidence that leverage index, sales growth and sales and administrative expense exerted positive effects and channels for corporate fraud and earning management of the selected Nigerian-listed consumer goods manufacturing companies. We found that while each of the day’s sales trade receivables index, assets quality index, leverage index and sales growth quality index exerted positive effects, the gross margin index, depreciation index and total accruals to total index exhibited negative insignificant effects. However, the joint attributes of corporate fraud and earnings management had a positive significant effect on Tobin’s Q as a firm value surrogate Our Conclusion: The study contributing to knowledge, provides new empirical evidence of the application of the Beneish M-Score model as a novelty to the probability incentive for corporate fraud and earnings management in the companies examined.

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Section: Introductionmentioning

confidence: 99%

Corporate Fraud, Earnings Management and Firm Value: Empirical Application of M-Scores

Folajimi,

Aguguom,

Ajah

et al. 2023

J. of Law and Sust. Develop.

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Ownership and investor responses to news on fraud and pecuniary actions: a comparative analysis of Indian banks

Anantha Krishnan,

Sengupta

2024

JMLC

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Purpose This study aims to understand investors’ reactions to news on fraud and pecuniary and regulatory action in privately owned and government-owned banks. Design/methodology/approach To examine the role of ownership holdings, this study deploys event study methodology and cross-sectional regression to analyze the abnormal returns and the intergroup dynamics. Event study methodology studies the abnormal return on stock prices on days when fraud, pecuniary actions and regulatory news were reported for 36 banks that are listed on the NSE. Data on news has been collected from Reuters for 110 months. Cross-sectional regression analyses are done to examine whether selected variables on bank characteristics influence the abnormal returns. Exploring the intergroup dynamics between government and privately owned banks helps to accentuate how stakeholders influence investor responses. Findings Private and government-owned banks display an anomalous return pattern during the events, though to varying degrees and for a longer duration. The sharp downturn observed in private banks in response to pecuniary and regulatory actions related to news can be attributed to the associated risk of these banks. Intergroup dynamics further demonstrate that the effect of such news regarding government-owned bank stocks is more pronounced on privately owned banks compared to the effect of news related to privately owned banks on public banks. Originality/value The study shows how ownership structure variedly impacts investors’ response to news related to fraud, and pecuniary and regulatory actions on Indian banks, which may eventually ask for customized investment approaches for government-owned and privately owned banks.

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Bibliometric analysis of artificial intelligence trends in auditing and fraud detection

Ramos,

Perez-Lopez,

Abreu

2024

CGOBR

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This research identifies trends in artificial intelligence (AI) in auditing and fraud detection using a combination of two methods: a bibliometric and a systematic review of AI trends in auditing in fraud detection. This research develops a bibliometric analysis of 1,348 papers on “fraud”, “auditing”, and “artificial intelligence” from 1986 to 2022. The results provide a robust set of information for in-depth research on AI trends in auditing and security detection. They not only demonstrate that there is growing academic interest in the research topic of fraud but also show clear evidence that the words “fraud”, “crime”, and “fraud detection” were the most cited, generating a great impact in the literature and developing concern with the topic. Our analysis suggests that the application of AI allows for greater facilitation of procedures to combat fraud and irregularities in the field of criminal justice and fundamental rights. Most technological changes increase ethical motivations to deter fraud, and these changes will lead to a long-term decrease in the incidence of fraud (Karpoff, 2021). This research contributes to AI valuing in audit procedures to detect and prevent fraud and simultaneously mitigate it. It also contributes to the literature, highlighting trends in AI, auditing and fraud detection, thereby enabling the development of professional judgment on the topic and providing direction for future investigations.

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Investor Reaction to the Discovery of Accounting Fraud: The Period from the Discovery of the Fraud to the Completion of the Correction

Cited by 3 publications

References 17 publications

Corporate Fraud, Earnings Management and Firm Value: Empirical Application of M-Scores

Corporate Fraud, Earnings Management and Firm Value: Empirical Application of M-Scores

Ownership and investor responses to news on fraud and pecuniary actions: a comparative analysis of Indian banks

Bibliometric analysis of artificial intelligence trends in auditing and fraud detection

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