IDEAS home Printed from https://ideas.repec.org/h/spr/prbchp/978-3-031-65533-3_7.html
   My bibliography  Save this book chapter

Detecting Manipulation: Anomaly Analysis of Annual Reports of Firms Listed on Borsa Istanbul Using Benford’s Law

In: Sustainable Development in Banking and Finance

Author

Listed:
  • Yavuz Selim Balcıoğlu

    (Gebze Technical University, Faculty of Business Administration)

  • Abdullah Kürşat Merter

    (Gebze Technical University, Faculty of Business Administration)

  • Sedat Çerez

    (Gebze Technical University, Faculty of Business Administration)

  • Gökhan Özer

    (Gebze Technical University, Faculty of Business Administration
    Kyrgz-Turkish Manas University, Faculty of Economics and Administrative Sciences)

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.

Suggested Citation

  • Yavuz Selim Balcıoğlu & Abdullah Kürşat Merter & Sedat Çerez & Gökhan Özer, 2024. "Detecting Manipulation: Anomaly Analysis of Annual Reports of Firms Listed on Borsa Istanbul Using Benford’s Law," Springer Proceedings in Business and Economics, in: Nesrin Ozatac & Nigar Taspinar & Bezhan Rustamov (ed.), Sustainable Development in Banking and Finance, pages 93-104, Springer.
    • Handle: RePEc:spr:prbchp:978-3-031-65533-3_7
    DOI: 10.1007/978-3-031-65533-3_7
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:prbchp:978-3-031-65533-3_7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.