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Alali, FA and Romero, S (2013)

Benford’s Law: Analyzing a decade of financial data

Journal of Emerging Technologies in Accounting Vol. 10, No. 1, pp. 1-39.

ISSN/ISBN: Not available at this time. DOI: 10.2308/jeta-50749

Abstract: This study uses a decade of financial accounting data to examine if and how they depart from Benford's Law. Using a large sample of U.S. public companies, we conduct an analysis of the first-two digits of data items generally used in research to measure total accruals and discretionary accruals and where fraud, restatements, and enforcement actions are revealed. We break down a decade of data into six subperiods; pre-SOX Period (2001), SOX 1 Period (2002–2003), SOX 2 Period (2004–2006), SOX 3 Period (2007), Crisis 1 Period (2008), and Crisis 2 Period (2009–2010). We find different indicators of manipulation during the periods studied, as well as differences between small and big companies and companies audited by Big 4 and non-Big 4 firms.

@article{, title={Benford's Law: Analyzing a Decade of Financial Data}, author={Alali, Fatima A and Romero, Silvia}, journal={Journal of Emerging Technologies in Accounting}, volume={10}, number={1}, pages={1--39}, year={2013}, publisher={American Accounting Association} }

Reference Type: Journal Article

Subject Area(s): Accounting