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Beneish Model for the Detection of Tax Manipulation: Evidence from Slovakia

Author

Listed:
  • Tomáš Baco

    (Ministry of Interior of the Slovak Republic)

  • Eduard Baumohl

    (University of Economics in Bratislava; Technical University of Košice, Faculty of Economics; Masaryk University; Institute of Economic Research SAS)

  • Matus Horvath

    (Masaryk University, Faculty of Economics and Administration)

  • Tomas Vyrost

    (University of Economics in Bratislava; Technical University of Košice, Faculty of Economics; asaryk University, Faculty of Economics and Administration)

Abstract

To test the usefulness of the Beneish model, we use a unique, not publicly available database from the Financial Administration of the Slovak Republic, aggregating the results of all on-site financial inspections conducted by this authority during 2015 – 2019. This database is paired with firm-level accounting data from the Registry of Financial Statements and the Business Register to obtain additional corporate governance data. Our results indicate that (a) the performance of the Beneish model is inferior for the Slovak data; (b) there are several significant financial variables with statistical and economic significance, but their relevance is conditional on the industry group; and (c) corporate governance indicators appear to be more relevant preventive factors of fraudulent behavior, especially foreign ownership, female CEO and corporate social responsibility.

Suggested Citation

  • Tomáš Baco & Eduard Baumohl & Matus Horvath & Tomas Vyrost, 2023. "Beneish Model for the Detection of Tax Manipulation: Evidence from Slovakia," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 71(3), pages 185-201, March.
    • Handle: RePEc:sav:journl:v:71:y:2023:i:3:p:185-201
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    References listed on IDEAS

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    More about this item

    Keywords

    earnings manipulation; Beneish model; accounting fraud; Slovakia; corporate governance;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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