Behavioral Red Flags and Loss Sizes from Asset Misappropriation: Evidence from the US
Advances in Accounting Behavioral Research
ISBN: 978-1-83867-402-1, eISBN: 978-1-83867-401-4
Publication date: 23 July 2020
Abstract
Auditors use behavioral red flags (BRFs) to examine which individuals are more prone to unwarranted behavior such as corruption and asset misappropriation. Using a rich data set from the Association of Certified Fraud Examiners (ACFE), we analyze the impact of BRFs on loss sizes from asset misappropriation. We control for antifraud mechanisms established at the company level and other factors both at the individual and the firm level. Performing an exploratory factor analysis yields six factors for BRFs which capture the principal perpetrator's situation both at the private level and the workplace. A general wheeler-dealer attitude and financial distress significantly increase loss sizes. By contrast, we find no evidence that nonmonetary private problems lead to higher losses.
Keywords
Acknowledgements
Acknowledgments
We are thankful to the Association of Certified Fraud Examiners (ACFE) for collecting the survey data and the Institute for Fraud Prevention (IFP) for providing access to the data. In addition, we thank anonymous reviewers and participants of the IFP's Spring 2015 Meeting for their helpful feedback.
Citation
Feess, E. and Timofeyev, Y. (2020), "Behavioral Red Flags and Loss Sizes from Asset Misappropriation: Evidence from the US", Karim, K.E. (Ed.) Advances in Accounting Behavioral Research (Advances in Accounting Behavioural Research, Vol. 23), Emerald Publishing Limited, Leeds, pp. 77-117. https://doi.org/10.1108/S1475-148820200000023004
Publisher
:Emerald Publishing Limited
Copyright © 2020 Emerald Publishing Limited