Published April 12, 2026 | Version v2
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Financial Statement Manipulations in Global Corporations: An Audit-Based Analysiss Using the Beneish M-Score Model

Description

This paper focuses on the probability of manipulation of financial statements in twenty large international companies, including ten Indian companies and ten non-Indian companies, in the future (2021- 2025) through the Beneish M-Score model. The sample size is 100 publicly traded firm-years based on annual reports prepared in Ind AS, IFRS and US GAAP financial reporting frameworks. All the eight Beneish variables are included to determine composite M-Scores which are compared to the standard threshold of -2.22.

The results show that about 95 percent of the observations lie below the manipulation threshold, implying that financial reporting integrity of the sampled firms is high. Nevertheless, the individual cases of high M-Scores can be traced among a few companies, whose increase or decrease is mainly caused by changes in the Sales Growth Index and indicators based on accruals. The comparison of cross country shows no statistically significant difference in mean M-Scores between non-Indian and Indian corporations and a larger variability among non-Indian corporations.

The findings emphasize the applicability of the Beneish M-Score as a beneficial analytical instrument to promptly identify possible earnings manipulation. The research has a practical implication to the auditors, the regulators and investors as it supports risk-based assessment and improves the quality of financial reporting evaluation in multinational corporate settings.

 

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Dates

Submitted
2026-04-12
Essential to effective capital distribution stands the trustworthiness of financial reports, since stakeholders like investors, lenders, officials, and review bodies depend upon company- provided data when judging results and exposure. Transparency along with consistency across entities has grown due to systems including IFRS, US GAAP, and Ind AS - each shaping how numbers are recorded and shared. Still, because accounting built on accruals permits judgment in reporting choices, room opens for guiding profits toward desired outcomes, possibly warping the true picture of organizational health.

References

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