Case study of a U.S. based public company caught in fraud : Analysis of Beneish M-Score variables
Mäkinen, Jon (2023)
2023
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2023052313387
https://urn.fi/URN:NBN:fi:amk-2023052313387
Tiivistelmä
The topic of the thesis was to use the Beneish M-Score model on a U.S. based public company caught in fraud to see if the model would detect the fraud and secondly if there were any signs in the eight different variables of the model that would have given investors an early warning sign.
The thesis also covers shortly the history of accounting. Since the analysis of the companies in this thesis is dependent on the balance sheet, income statement and the cash flow statement, they are covered in more detail. Finally, there is also a section that covers fraud in general and the Beneish M-Score model.
As a conclusion, the model did succeed to capture the fraud, although the signal was not strong and would be considered a “yellow flag” rather than a “red flag”. The model would also suggest that the fraud started in 2012, instead of 2013. When analyzing fraud, it’s recommended to also use other methods than just quantitative.
The thesis also covers shortly the history of accounting. Since the analysis of the companies in this thesis is dependent on the balance sheet, income statement and the cash flow statement, they are covered in more detail. Finally, there is also a section that covers fraud in general and the Beneish M-Score model.
As a conclusion, the model did succeed to capture the fraud, although the signal was not strong and would be considered a “yellow flag” rather than a “red flag”. The model would also suggest that the fraud started in 2012, instead of 2013. When analyzing fraud, it’s recommended to also use other methods than just quantitative.