Erratum to: Financial statement errors: evidence from the distributional properties of financial statement numbers

Predictability of financial statements fraud-risk using Benford’s Law

“…Today, theoretical distribution about 1 is known by Benford's law (Amiram et al, 2015). Almost fifty years later, independent of Newcomb's original paper, Frank Benford, a physicist, came to the same conclusion Newcomb had arrived some years ago.…”

“…This rule indicates the probability of the occurrence of different digits in a set of numbers. Relying on the specificity of the distribution of figures in a set called financial statements and using a theoretical distribution called Benford's Law Distribution, a different method can be introduced as a tool to investigate and predict fraud (Amiram et al, 2015).…”

“…The results also showed that there is a negative relationship between earnings management and institutional investment. In another study, Amiram et al (2015) examined the deviation from Benford's law on financial statements and its impact on the capital market, in which the results of this study showed that deviating from Benford's law would reduce stock returns. Indrabudiman and Hidayat (2016) also investigated the relationship between fraud and Benford law and introduced deviations from Benford's law as a criterion for detecting fraud in the financial statements.…”