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Application of Beneish M-Score Model in detecting probable earnings manipulation in Malaysian Public Listed Companies / Nor Aqilah Sutainim, Nor Farizal Mohammed and Amrizah Kamaluddin

Earnings manipulation involves alteration, adjustment, exploitation, and even timing of transactions in financial statements with the intention to report a sound economic performance in a company. This act could jeopardize the company’s financial performance in the long run and also make its stakeho...

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Main Authors: Sutainim, Nor Aqilah, Mohammed, Nor Farizal, Kamaluddin, Amrizah
Format: Book Section
Language:English
Published: Faculty of Accountancy 2019
Subjects:
Balance sheets. Financial statements. Including corporation reports. Financial reporting. Financial disclosure
Earnings management
Online Access:http://ir.uitm.edu.my/id/eprint/44325/1/44325.pdf
http://ir.uitm.edu.my/id/eprint/44325/
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spelling my.uitm.ir.443252021-04-12T09:52:36Z http://ir.uitm.edu.my/id/eprint/44325/ Application of Beneish M-Score Model in detecting probable earnings manipulation in Malaysian Public Listed Companies / Nor Aqilah Sutainim, Nor Farizal Mohammed and Amrizah Kamaluddin Sutainim, Nor Aqilah Mohammed, Nor Farizal Kamaluddin, Amrizah Balance sheets. Financial statements. Including corporation reports. Financial reporting. Financial disclosure Earnings management Earnings manipulation involves alteration, adjustment, exploitation, and even timing of transactions in financial statements with the intention to report a sound economic performance in a company. This act could jeopardize the company’s financial performance in the long run and also make its stakeholders to suffer significant losses. Therefore, a tool to detect or predict earnings manipulation would be helpful to the stakeholders, practitioners, regulators, academicians, and professionals in the accounting field. Besides, an early detection tool is needed to alarm the enforcement agencies to make further investigations or legal actions. Therefore, this study aimed to analyse the Beneish M-Score models and its eight accounting variables to detect the likelihood to engage in earnings manipulation in the case of Malaysian PLCs (Public Listed Companies). The financial data of 80 of PLCs from 2015 to 2017 were gathered. This study applied Beneish Model as a detection tool for earnings manipulation and anomalies of red flags and to classify the companies into two groups which are manipulators and non-likely manipulators. The Independent T-tests were analysed to identify dominating ratios. The results of this study found that M-Score and its three indexes were significant different for manipulators and non-likely manipulators which are Sales Growth Index (SGI), Total Accruals to Total Assets (TATA) and Days’ Sales Receivable index (DSRI). The percentage of manipulators had slightly decreased in 2016 and gradually increased in 2017. Hence, the inflation or overestimation of sales and revenues as well as accruals could signals earnings manipulation. Faculty of Accountancy 2019 Book Section PeerReviewed text en http://ir.uitm.edu.my/id/eprint/44325/1/44325.pdf Sutainim, Nor Aqilah and Mohammed, Nor Farizal and Kamaluddin, Amrizah (2019) Application of Beneish M-Score Model in detecting probable earnings manipulation in Malaysian Public Listed Companies / Nor Aqilah Sutainim, Nor Farizal Mohammed and Amrizah Kamaluddin. In: ICAM2019 – International Conference on Accounting and Management. Faculty of Accountancy, Universiti Teknologi MARA Puncak Alam, Selangor, p. 121. ISBN 978-967-17038-0-9
institution Universiti Teknologi Mara
building Tun Abdul Razak Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Teknologi Mara
content_source UiTM Institutional Repository
url_provider http://ir.uitm.edu.my/
language English
topic Balance sheets. Financial statements. Including corporation reports. Financial reporting. Financial disclosure
Earnings management
spellingShingle Balance sheets. Financial statements. Including corporation reports. Financial reporting. Financial disclosure
Earnings management
Sutainim, Nor Aqilah
Mohammed, Nor Farizal
Kamaluddin, Amrizah
Application of Beneish M-Score Model in detecting probable earnings manipulation in Malaysian Public Listed Companies / Nor Aqilah Sutainim, Nor Farizal Mohammed and Amrizah Kamaluddin
description Earnings manipulation involves alteration, adjustment, exploitation, and even timing of transactions in financial statements with the intention to report a sound economic performance in a company. This act could jeopardize the company’s financial performance in the long run and also make its stakeholders to suffer significant losses. Therefore, a tool to detect or predict earnings manipulation would be helpful to the stakeholders, practitioners, regulators, academicians, and professionals in the accounting field. Besides, an early detection tool is needed to alarm the enforcement agencies to make further investigations or legal actions. Therefore, this study aimed to analyse the Beneish M-Score models and its eight accounting variables to detect the likelihood to engage in earnings manipulation in the case of Malaysian PLCs (Public Listed Companies). The financial data of 80 of PLCs from 2015 to 2017 were gathered. This study applied Beneish Model as a detection tool for earnings manipulation and anomalies of red flags and to classify the companies into two groups which are manipulators and non-likely manipulators. The Independent T-tests were analysed to identify dominating ratios. The results of this study found that M-Score and its three indexes were significant different for manipulators and non-likely manipulators which are Sales Growth Index (SGI), Total Accruals to Total Assets (TATA) and Days’ Sales Receivable index (DSRI). The percentage of manipulators had slightly decreased in 2016 and gradually increased in 2017. Hence, the inflation or overestimation of sales and revenues as well as accruals could signals earnings manipulation.
format Book Section
author Sutainim, Nor Aqilah
Mohammed, Nor Farizal
Kamaluddin, Amrizah
author_facet Sutainim, Nor Aqilah
Mohammed, Nor Farizal
Kamaluddin, Amrizah
author_sort Sutainim, Nor Aqilah
title Application of Beneish M-Score Model in detecting probable earnings manipulation in Malaysian Public Listed Companies / Nor Aqilah Sutainim, Nor Farizal Mohammed and Amrizah Kamaluddin
title_short Application of Beneish M-Score Model in detecting probable earnings manipulation in Malaysian Public Listed Companies / Nor Aqilah Sutainim, Nor Farizal Mohammed and Amrizah Kamaluddin
title_full Application of Beneish M-Score Model in detecting probable earnings manipulation in Malaysian Public Listed Companies / Nor Aqilah Sutainim, Nor Farizal Mohammed and Amrizah Kamaluddin
title_fullStr Application of Beneish M-Score Model in detecting probable earnings manipulation in Malaysian Public Listed Companies / Nor Aqilah Sutainim, Nor Farizal Mohammed and Amrizah Kamaluddin
title_full_unstemmed Application of Beneish M-Score Model in detecting probable earnings manipulation in Malaysian Public Listed Companies / Nor Aqilah Sutainim, Nor Farizal Mohammed and Amrizah Kamaluddin
title_sort application of beneish m-score model in detecting probable earnings manipulation in malaysian public listed companies / nor aqilah sutainim, nor farizal mohammed and amrizah kamaluddin
publisher Faculty of Accountancy
publishDate 2019
url http://ir.uitm.edu.my/id/eprint/44325/1/44325.pdf
http://ir.uitm.edu.my/id/eprint/44325/
_version_ 1696979101972168704
score 13.211869

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