Detecting Probable Earnings Manipulation in GSM Firms: A Case Study of Shekhawati Poly-Yarn Limited and W.S. Industries (India) Limited
Keywords:Earning Manipulation, Graded Surveillance Measure (GSM), Beneish M-Score, Dechow F-Score, Piotriski F-Score
The Graded Surveillance Measure (GSM) aims to pinpoint companies having unusual price fluctuation in the market price of shares leading to the possibility of mischief or manipulations. Such raises the question that whether such companies have also cooked their books or not. Purpose: The case study attempts to detect probable manipulation in the financial reporting of two selected manufacturing firms (securities) under the GSM stages of NSE. Methodology: The study has been carried out using a case study approach by employing various financial statement fraud (FSF) detection models such as Beneish M-Score, Dechow F-Score, Piotriski F-Score and Montier C-Score using their financial reports from the year 2017 to 2021. Outcome: The results show that Shekhawati Poly-Yarn limited and WS Industries Limited have several probable earnings manipulations as per M-score while the Dechow F score indicates no false representation in the financial information. For financial health, both firms are struggling to maintain their financial health during the study period.
Alareeni, B., & Aljuaidi, O. (2014, December 4). The Modified Jones and Yoon Models in Detecting Earnings Management in Palestine Exchange (PEX). International Journal of Innovation and Applied Studies, 9, 1472-1484. Retrieved 09 01, 2022, from https://www.researchgate.net/publication/320703058_The_Modified_Jones_and_Yoon_Models_in_Detecting_Earnings_Management_in_Palestine_Exchange_PEX
Beneish, M. D. (1999). The Detection of Earnings Manipulation. Financial Analyst Journal, 55(5), 24-36. doi:doi.org/10.2469/faj.v55.n5.2296
Dechow, P. M., GE, W., Larson, C. R., & Sloan, R. G. (2011, January 27). Predicting Material Accounting Misstatements. Contemporary Accounting Research, 28(1), 17-82. doi:doi:10.1111/j.1911-3846.2010.01041.x
Govender, Y. (2013). AN APPLICATION OF MONTIER'S C-SCORE TO THE JOHANNESBURG SECURITIES EXCHANGE: A TOOL FOR SHORT SELLING. University of Pretoria, Gorden Institute of Business Science. University of Pretoria. Retrieved 10 12, 2022, from http://hdl.handle.net/2263/40570
Hung, D. N., Ha, H. T., & Binh, D. T. (2017, December). Application of F-Score in Predicting Fraud, Errors:Experimental Research in Vietnam. International Journal of Accounting and Financial Reporting, 7((2)), 303-322. doi: https://doi.org/10.5296/ijafr.v7i2.12174
Kukreja, G., Gupta, S. M., Sarea, A., & Kumaraswamy, S. (2020, December). Beneish M-score and Altman Z-score as a catalyst for corporate fraud detection. Journal of Investment Compliance, 21(4). doi:10.1108/JOIC-09-2020-0022
Maniatis, A. (2021, June 16). Detecting the probability of financial fraud due to earnings manipulation in companies listed in Athens Stock Exchange Market. Journal of Financial Crime, 29(2), 603-619. doi:doi.org/10.1108/JFC-04-2021-0083
Musanovic, E., & Halilbegovic, S. (2021, December 05). FINANCIAL STATEMENT MANIPULATION IN FAILING SMALL AND MEDIUM-SIZED ENTERPRISES IN BOSNIA AND HERZEGOVINA. JOURNAL OF EASTERN EUROPEAN AND CENTRAL ASIAN RESEARCH, 8(4), 556-569. doi:10.15549/jeecar.v8i4.692
National Stock Exchange. (2022, oct 7). Graded Surveillance Measure (GSM) Frequently Asked Questions (FAQs). (National Stock Exchange of India Ltd. ) Retrieved oct 7, 2022, from National Stock Exchange: https://www.nseindia.com/regulations/graded-surveillance-measure
Pustylnick, I. (2011, 11 16). ALGORITHM OF DETECTION OF MANIPULATIONS WITH REVENUE AND RETAINED EARNINGS IN FINANCIAL. Accounting & Taxation, 4(2), 95-105. Retrieved 04 05, 2022, from https://d1wqtxts1xzle7.cloudfront.net/51135395/Algorithm_of_Detection_of_Manipulations_20161231-30229-5segzp-libre.pdf?1483230662=&response-content-disposition=inline%3B+filename%3DAlgorithm_of_Detection_of_Manipulations.pdf&Expires=1649409602&Signature=C
Rossi, M., Festa, G., Kolte, A., & Riad Shams, S. (2021). The strange case of the Jet Airways bankruptcy: a financial structure analysis. Journal of Operational Risk, 15(4), 37-52. doi:DOI: 10.21314/JOP.2020.245
Sasikala, D. (2021, January). Altman Z, Messod Beneish M, Piotroski F-scores of Samsung Electronics Limited. International Journal of Management Research and Social Science, 8(1), 3-6. Retrieved 10 04, 2022, from https://www.academia.edu/49152123/Altman_Z_Messod_Beneish_M_Piotroski_F_scores_of_Samsung_Electronics_Limited
How to Cite
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
This is an open access article under the CC BY-NC-ND license Creative Commons Attribution-Noncommercial 4.0 International (CC BY-NC 4.0).