Does the Enron Case Study Provide Valuable Lessons in the Early Detection of Corporate Fraud &amp; Failure?

Tebogo, Baitshepi

doi:10.2139/ssrn.1906045

Cited by 3 publications

(2 citation statements)

References 7 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…To avoid such failure of detection, the models for detecting earnings management and corporate failures should be used concurrently by the stakeholders especially auditors, watchdog institutions, financial analysis, etc. The authors of this study also agree with Tebogo (2011) that the model of detecting earnings management should be used before using the model for detecting corporate failure. Because the failure detection model will not work very well when the financial information is manipulated.…”

Section: Introductionsupporting

confidence: 81%

Impacts of Earnings Management on Corporate Failure: A Case Study of Wirecard

2021

ijafr

View full text Add to dashboard Cite

The purpose of this study is to find out whether earnings management has impacts on bankruptcy risk based on the data of Wirecard Company. The M-score of Beneish's (1999) model has been used to detect the probability of earnings management. On the other hand, the Z"-Score of Altman's (1968) model has been applied to detect Corporate Failure. Both the models are widely used models in their respective fields. The data from 2002 to 2019 were collected from the annual reports of the Wirecard Company. The result of M-Score indicates that earnings management has a significant impact on the corporate failure (Z-Score) of the company. This finding specifies that a financially distressed firm adopts earnings manipulations. The finding also implies that earnings manipulations harm the financial health of a firm. According to the findings, it can be suggested that to know the financial aspects of a company, both the (Beneish M-model and Altman Z-score model) models could be used concurrently. Beneish M-model is for detecting earnings management and the Altman Z-score model is for determining corporate failure. The novelty of the study is that no study was done on Wirecard Company focusing on the association between earnings management & bankruptcy risk.

show abstract

Section: Introductionsupporting

confidence: 81%

Impacts of Earnings Management on Corporate Failure: A Case Study of Wirecard

2021

ijafr

View full text Add to dashboard Cite

show abstract

“…The pressure motive arises when companies or individuals face circumstances that compel them to commit fraud such as financial constraints or the need to meet expectations that are placed upon them. Drawing on the case of fraud perpetrated by Enron, we observe that the company manipulated its profits to maintain a favorable financial performance, meeting the shareholders' expectations (Tebogo 2011). Consequently, investors' aspirations and their anticipations of positive outcomes from the company exerted pressure on its management to engage in fraudulent activities.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 98%

Predicting Risk of and Motives behind Fraud in Financial Statements of Jordanian Industrial Firms Using Hexagon Theory

Bader,

Abu Hajar,

Weshah

et al. 2024

JRFM

View full text Add to dashboard Cite

This study intends to identify the motives that lead to increasing or fighting the fraud risk in the Financial Statements (FSs) of industrial companies whose shares are traded in regulated and unregulated markets at the Amman Stock Exchange (ASE) based on the Hexagon theory, which divides the motives for fraud into six factors. The study relied on secondary data to collect and measure the study variables by extracting them from the annual reports that were published by those companies on the website of the ASE during the period of 2012–2017. The collected data were analyzed using the logistic regression model on the SPSS program. The results confirmed that the return on assets (ROA), percentage of independent members in audit committees, and tone-related party transactions had a statistically significant relationship with predicted fraudulent FSs, where these three variables belong to pressure, opportunity, and collusion fraud motives, respectively. Thus, it is worth mentioning that this study is distinguished from previous studies that examined the issue of fraud in Jordanian companies by detecting the motives of fraud according to the Fraud Hexagon theory. Moreover, some of the fraud motives were measured using new variables such as a change in inventory, the age of auditing committee’s members, and tone-related party transactions.

show abstract

Could the Collapse of UT Bank Been Anticipated Sooner?

Simpson

2018

SSRN Journal

View full text Add to dashboard Cite

Does the Enron Case Study Provide Valuable Lessons in the Early Detection of Corporate Fraud & Failure?

Cited by 3 publications

References 7 publications

Impacts of Earnings Management on Corporate Failure: A Case Study of Wirecard

Impacts of Earnings Management on Corporate Failure: A Case Study of Wirecard

Predicting Risk of and Motives behind Fraud in Financial Statements of Jordanian Industrial Firms Using Hexagon Theory

Could the Collapse of UT Bank Been Anticipated Sooner?

Contact Info

Product

Resources

About