Veronika Fenyves

Department of Controlling,

University of Debrecen,

Debrecen, Hungary

E-mail: fenyves.veronika@econ.unideb.hu

ORCID 0000-0002-8737-0666

Investigation of accounting manipulation using the Beneish model: Hungarian case

Tomasz Pisula

Faculty of Management,

Rzeszów University of Technology,

Rzeszów, Poland

E-mail: tpisula@prz.edu.pl

ORCID 0000-0001-7111-9955

Tibor Tarnoczi

Department of Finance,

University of Debrecen,

Debrecen, Hungary

E-mail: tarnoczi.tibor@econ.unideb.hu

ORCID 0000-0002-5655-6871

Abstract. The study examined the manipulation level of Hungarian corporate financial statements using Beneish’s M-score model with eight variables between 2017 and 2021. The research also investigated whether the financial statement manipulations depend on the type of sector, company size and age, and region. The research sample was comprised of 32,024 financial statements each year. Statistical tests were used to compare the M-score values of several groups. The proportion of companies with possibly manipulated financial statements varied between 46.43% and 51.67% in the five years. It can be concluded that the manipulation of Hungarian companies’ reports is very high. The analysis showed that the ratios of unlikely manipulated (UM) and likely manipulated (LM) reports were improved at size category 1-4, and size category five significantly improved. The comparison by regions revealed that the UM/LM indicator is lower in more developed regions than in less developed ones. The results draw the attention of government decision-makers to pay more attention to checking financial statements. In addition, it shows to the companies’ stakeholders that the reliability of the financial statements must also be considered during their decision preparations and risk assessment.

Received: April, 2023

1st Revision: October, 2023

Accepted: December, 2023

DOI: 10.14254/2071-789X.2023/16-4/18

JEL Classification: M41, M42, G30

Keywords: Beneish model, accounting manipulation, financial statements, Hungarian companies