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Gava, AM and Vitiello, LRdS (2007)

Inflation, Quarterly Financial Statements and Fraud: Benfordís Law and the Brazilian Case.

XXXI Encontro da ANPAD, Rio de Janeiro, Sep 22-26, 2007.

ISSN/ISBN: Not available at this time. DOI: Not available at this time.



Abstract: There is an increasing concern in the financial markets regarding the quality of financial statements issued by public companies. Actually, investors are mainly concerned about what they cannot see; that is the possibility of them being ripped off. Although fraud is usually generated inside the company there are exogenous factors that may contribute to the companiesí decision of reporting a fraudulent financial statement. We apply Benfordís law to approximately two thousand quarterly balance sheets of 44 Brazilian public companies from 1986 to 2002 in order to test the probability of occurrence of fraud. Our findings suggest an inverse relationship between inflation and fraud: the higher the former the lower the latter. The results also suggest that the probability of occurrence of fraud is higher in the financial statements published in the first three quarters then in the one published in the fourth quarter.


Bibtex:
@misc{, AUTHOR = {Alexandre Majola Gava and Luiz Roque de Souza Vitiello Jr.}, TITLE = {Inflation, Quarterly Financial Statements and Fraud: Benford's Law and the Brazilian Case.}, HOWPUBLISHED = {online}, YEAR = {2007}, MONTH = {September}, NOTE = {XXXI Encontro da ANPAD, Rio de Janeiro}, URL = {http://www.anpad.org.br/diversos/trabalhos/EnANPAD/enanpad_2007/CONT/2007_CONA819.pdf}, }


Reference Type: Conference Paper

Subject Area(s): Accounting