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Cox, RAK and Antalovschi, NP (2024)

An Application of Benford’s Law in the NASDAQGS Health Care Industry

Journal of Finance and Accountancy 33, pp. 1–21.

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



Abstract: This paper investigates the price distribution of stocks listed in the NASDAQGS Health Care Industry for congruence to the expected price distribution of Benford’s Law (BL). BL mirrors a logarithmic function that predicts the leading digits of prices will have a higher probability of lower numbers such as 1, 2, 3 versus higher numbers such as 7, 8, 9. The statistical analysis utilized the chi-square test for the distribution of numbers by digit as well as the z-statistic for the individual numbers by digit. The findings show the first digit, second digit, and fourth digit frequencies of the NASDAQGS conform to BL. Nevertheless, the third digit probabilities did not support the hypothesis of alignment to the BL forecast. These results strongly support the efficacy of BL as typically only the leading two digits comply with BL and trailing digits normally do not fit with BL.


Bibtex:
@article{, author = {Raymond A. K. Cox and Natalia Popa Antalovschi}, title = { An Application of Benford’s Law in the NASDAQGS Health Care Industry}, year = {2024}, journal = {Journal of Finance and Accountancy}, volume = {33}, pages = {1—21}, url = {https://jo.aabri.com/manuscripts/243791.pdf}, }


Reference Type: Journal Article

Subject Area(s): Accounting, Medical Sciences