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Balcıoğlu, YS, Merter, AK, Cerez, S and Özer, G (2024)

Analysis of Annual Reports of Firms Listed on Borsa Istanbul Using Benford’s Law

In: Ozatac, N., Taspinar, N., Rustamov, B. (eds) Sustainable Development in Banking and Finance. ICBFP 2023. Springer Proceedings in Business and Economics. Springer, Cham..

ISSN/ISBN: Not available at this time. DOI: 10.1007/978-3-031-65533-3_7



Abstract: In financial analysis, the analysis of firms’ annual reports plays an important role in assessing firm stability and overall financial health. These reports contain information on the firm’s operational activities, strategies, and financial data. Nowadays, organizations may perform manipulative transactions on some values while communicating their true financial position to stakeholders. Different tools can be used to detect such manipulative transactions. Among these techniques, Benford’s law is a mathematical principle that argues that the numbers in each digit of the data in the sample should have a certain frequency of occurrence. This study aims to identify anomalies in the data by applying Benford analysis on the annual reports of non-financial enterprises operating in Borsa Istanbul in 2019 and 2020. According to the findings, the 2019 reports are most likely to comply with Benford’s law. However, more anomalies were detected in 2020, when firm activities were severely damaged due to the COVID-19 pandemic, compared to the previous year. The increase exceeding the anomaly threshold in 2020 compared to 2019 emphasizes the importance of volatility in this period. Such deviations point to potential anomalies and remind us of the significant effects that external factors experienced during the pandemic may have on financial data. In conclusion, this study underlines that Benford’s law can be used as a potential tool to detect the manipulation in firms’ financial data.


Bibtex:
@InProceedings{, author="Balc{\i}o{\u{g}}lu, Yavuz Selim and Merter, Abdullah K{\"u}r{\c{s}}at and {\c{C}}erez, Sedat and {\"O}zer, G{\"o}khan", editor="Ozatac, Nesrin and Taspinar, Nigar and Rustamov, Bezhan", title="Detecting Manipulation: Anomaly Analysis of Annual Reports of Firms Listed on Borsa Istanbul Using Benford's Law", booktitle="Sustainable Development in Banking and Finance", year="2024", publisher="Springer Nature Switzerland", address="Cham", pages="93--104", isbn="978-3-031-65533-3" doi = {10.1007/978-3-031-65533-3_7}, }


Reference Type: Conference Paper

Subject Area(s): Accounting