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Article
Publication date: 14 October 2022

Neerav Nagar and Mehul Raithatha

The authors examine whether internal corporate governance mechanisms are effective in curbing cash flow manipulation through real activities, misclassification, and timing.

Abstract

Purpose

The authors examine whether internal corporate governance mechanisms are effective in curbing cash flow manipulation through real activities, misclassification, and timing.

Design/methodology/approach

The sample comprises of firms from an emerging market, India with data for years 2004 through 2015. The authors use the methodology given in Roychowdhury (2006).

Findings

The authors find that corporate boards in India play an active role in curbing cash flow manipulation through real activities but fail to control cash flow manipulation through misclassification and timing.

Practical implications

The study suggests that corporate boards should pay more attention to the reported cash flow numbers. Regulators can reduce the opportunities available for cash flow misclassification by fixing relevant accounting and governance norms. Auditors can also help by critically focusing on the cash flow classifications presented by management.

Originality/value

This study, to the authors’ knowledge, is the first study that talks about the role of internal governance in a trade-off between different cash flow manipulation techniques.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Book part
Publication date: 10 February 2020

Esra Atabay and Engin Dinç

Financial manipulation means the modification made knowingly and willfully by businesses in accounting records and transactions, in financial statements, through addition…

Abstract

Financial manipulation means the modification made knowingly and willfully by businesses in accounting records and transactions, in financial statements, through addition and subtraction, for the purpose of misleading financial information users. Financial manipulations are expected to have an effect on the decisions of financial information users. The present study was established on the basis of two main objectives. The first objective is to determine whether banks, which are Public Interest Entities (PIE), manipulate their financial statements. As for the second objective, it is to reveal whether the detected financial manipulations have an effect on investor decisions. The research conducted to achieve the first objective is based on the examination of independent audit reports for the periods between 2009 and 2017, pertaining to 45 banks registered to the Banks Association of Turkey, in terms of presented opinions. Data acquired from examined reports were subjected to content analysis via the Microsoft Excel program. In line with the second objective of the study, investor numbers for the periods between 2010 and 2017, of 13 banks, which are within the scope of BIST BANK, were included in the analysis, according to data acquired from the Central Registry Agency. Financial statements of banks, with audit reports in which a qualified opinion is expressed, were considered to have been manipulated. SPSS 22.0 statistics pack software was used to analyze whether investment demands toward these banks had an effect on decisions of domestic and foreign investors. In the analysis, frequency and One-Way ANOVA tests were used. In consequence of the analyses conducted, it was determined that, around one fifth of financial statements of PIE banks, pertaining to the periods between 2009 and 2017, were manipulated; it was mostly committed by private banks, and majority of the manipulations were committed due to free provisions made. It was also observed that manipulations did not have an effect on decisions of neither domestic nor foreign investors. The reason behind the latter is the fact that while the level of manipulations in financial statements is significant, it is not a widespread occurrence.

Details

Contemporary Issues in Audit Management and Forensic Accounting
Type: Book
ISBN: 978-1-83867-636-0

Keywords

Book part
Publication date: 13 May 2017

Brigham R. Frandsen

Conventional tests of the regression discontinuity design’s identifying restrictions can perform poorly when the running variable is discrete. This paper proposes a test…

Abstract

Conventional tests of the regression discontinuity design’s identifying restrictions can perform poorly when the running variable is discrete. This paper proposes a test for manipulation of the running variable that is consistent when the running variable is discrete. The test exploits the fact that if the discrete running variable’s probability mass function satisfies a certain smoothness condition, then the observed frequency at the threshold has a known conditional distribution. The proposed test is applied to vote tally distributions in union representation elections and reveals evidence of manipulation in close elections that is in favor of employers when Republicans control the NLRB and in favor of unions otherwise.

Details

Regression Discontinuity Designs
Type: Book
ISBN: 978-1-78714-390-6

Keywords

Book part
Publication date: 10 February 2020

Murat Erdoğan and Eda Oruç Erdoğan

The purpose of the financial statements is to present the situations of the enterprises, such as the financial situation, results of operations, etc., in the…

Abstract

The purpose of the financial statements is to present the situations of the enterprises, such as the financial situation, results of operations, etc., in the decision-making processes to the related parties in a suitable, comparable, and realistic manner. In recent years, professional frauds in enterprises have been seriously reflected in financial statements and this has resulted in the manipulation of financial information.

In this study, we aim to determine financial firms, which might manipulate the financial information, by applying the Beneish model and then determine the financial indicators of possible financial statement manipulation, using logistic regression. For this purpose, companies included constantly in Borsa İstanbul-50 (BIST-50) 2015, 2016, and 2017 were examined. After the enterprises which have the possibility of financial manipulation are determined by the Beneish model, it is understood that there is a positive relationship between the probability of manipulating financial information and the Asset Quality Index and Sales, general and administrative expenses index.

Details

Contemporary Issues in Audit Management and Forensic Accounting
Type: Book
ISBN: 978-1-83867-636-0

Keywords

Article
Publication date: 26 August 2022

Thi Thu Ha Nguyen, Salma Ibrahim and George Giannopoulos

The use of models for detecting earnings management in the academic literature, using accrual and real manipulation, is commonplace. The purpose of the current study is to…

Abstract

Purpose

The use of models for detecting earnings management in the academic literature, using accrual and real manipulation, is commonplace. The purpose of the current study is to compare the power of these models in a United Kingdom (UK) sample of 19,424 firm-year observations during the period 1991–2018. The authors include artificially-induced manipulation of revenues and expenses between zero and ten percent of total assets to random samples of 500 firm-year observations within the full sample. The authors use two alternative samples, one with no reversal of manipulation (sample 1) and one with reversal in the following year (sample 2).

Design/methodology/approach

The authors include artificially induced manipulation of revenues and expenses between zero and ten percent of total assets to random samples of 500 firm-year observations within the full sample.

Findings

The authors find that real earnings manipulation models have lower power than accrual earnings manipulation models, when manipulating discretionary expenses and revenues. Furthermore, the real earnings manipulation model to detect overproduction has high misspecification, resulting in artificially inflating the power of the model. The authors examine an alternative model to detect discretionary expense manipulation that generates higher power than the Roychowdhury (2006) model. Modified real manipulation models (Srivastava, 2019) are used as robustness and the authors find these to be more misspecified in some cases but less in others. The authors extend the analysis to a setting in which earnings management is known to occur, i.e. around benchmark-beating and find consistent evidence of accrual and some forms of real manipulation in this sample using all models examined.

Research limitations/implications

This study contributes to the literature by providing evidence of misspecification of currently used models to detect real accounts manipulation.

Practical implications

Based on the findings, the authors recommend caution in interpreting any findings when using these models in future research.

Originality/value

The findings address the earnings management literature, guided by the agency theory.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

Keywords

Abstract

Details

Modern Energy Market Manipulation
Type: Book
ISBN: 978-1-78743-386-1

Abstract

Details

Developing an Effective Model for Detecting Trade-based Market Manipulation
Type: Book
ISBN: 978-1-80117-397-1

Book part
Publication date: 12 August 2017

Jennifer McLeer

This paper introduces a method by which researchers can assess the strength of their status manipulations in experimental research by comparing them against Monte Carlo…

Abstract

Purpose

This paper introduces a method by which researchers can assess the strength of their status manipulations in experimental research by comparing them against Monte Carlo simulated distributions that use aggregate Status Characteristics Theory (SCT) data.

Methodology

This paper uses Monte Carlo methods to simulate the m and q parameter distributions and the proportion of stay (P(s)) score distributions for four commonly used status situations. It also presents findings from an experiment that highlight the processes by which researchers can utilize these simulated distributions in their assessment of novel status manipulations.

Findings

Findings indicate that implicitly relevant status manipulations have considerably more overlapping P(s) scores in the simulated distributions of high and low states of a status characteristic than explicitly relevant status manipulations. Findings also show that a novel status manipulation, the handedness manipulation, sufficiently creates high- and low-status differences in P(s) scores.

Research implications

Future researchers can use these simulated distributions to plot the mean P(s) scores of each of their experimental conditions on the overlapping distribution for the corresponding status manipulation. Manipulations that produce scores that fall outside of the range of overlapping values are also likely to create status differences between conditions in other settings or populations.

Article
Publication date: 7 December 2021

Thorsten Stephan Beck

This paper provides an introduction to research in the field of image forensics and asks whether advances in the field of algorithm development and digital forensics will…

Abstract

Purpose

This paper provides an introduction to research in the field of image forensics and asks whether advances in the field of algorithm development and digital forensics will facilitate the examination of images in the scientific publication process in the near future.

Design/methodology/approach

This study looks at the status quo of image analysis in the peer review process and evaluates selected articles from the field of Digital Image and Signal Processing that have addressed the discovery of copy-move, cut-paste and erase-fill manipulations.

Findings

The article focuses on forensic research and shows that, despite numerous efforts, there is still no applicable tool for the automated detection of image manipulation. Nonetheless, the status quo for examining images in scientific publications remains visual inspection and will likely remain so for the foreseeable future. This study summarizes aspects that make automated detection of image manipulation difficult from a forensic research perspective.

Research limitations/implications

Results of this study underscore the need for a conceptual reconsideration of the problems involving image manipulation with a view toward the need for interdisciplinary collaboration in conjunction with library and information science (LIS) expertise on information integrity.

Practical implications

This study not only identifies a number of conceptual challenges but also suggests areas of action that the scientific community can address in the future.

Originality/value

Image manipulation is often discussed in isolation as a technical challenge. This study takes a more holistic view of the topic and demonstrates the necessity for a multidisciplinary approach.

Details

Journal of Documentation, vol. 78 no. 5
Type: Research Article
ISSN: 0022-0418

Keywords

Article
Publication date: 16 March 2021

Yan Chen, Tianwei Tang, Yongjian Li and Di Fan

This study examines whether a higher interest alignment between online travel agencies (OTAs; hosting platform) and hotels (business owners) will intensify review…

Abstract

Purpose

This study examines whether a higher interest alignment between online travel agencies (OTAs; hosting platform) and hotels (business owners) will intensify review manipulation activities.

Design/methodology/approach

With a panel data set collected from a Chinese online travel agency and a travel search engine, the authors develop a matching-based difference-indifference approach to examine the presence of partnership-intensified review manipulation.

Findings

The authors find that the ratings of agency's partner hotels (with a higher interest alignment) are abnormally higher than those of matched non-partner hotels (with a lower interest alignment), after they are benchmarked with their ratings on the search engine (without a partnership business model). Further, the analysis results indicate that this partnership-intensified manipulation deteriorates the hotel's sales performance because of damaged customer trust and satisfaction.

Originality/value

Previous studies implicitly assume that review manipulator is independent from the hosting platform. This is the first study examining the role of the hosting platform in review manipulations.

Details

Industrial Management & Data Systems, vol. 121 no. 6
Type: Research Article
ISSN: 0263-5577

Keywords

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