Application of the M-Score Model to Test the Reliability of Financial Statements at Companies Listed on the Vietnamese Stock Market
1Thi Huong Tram Le,2Thuy Vinh Nguyen,3Thi Xuan Huong Le
1,2Accounting Department, University of Labour and Social Affairs, Vietnam
3Insurance Department, University of Labour and Social Affairs, Vietnam
https://doi.org/10.47191/jefms/v6-i6-57ABSTRACT:
The reliability of financial statements is important to many people such as investors, corporate shareholders, and auditors. A reliable financial report is free from problems of fraud and manipulation by corporate management. Using the methodology and meta-analysis, the research team found that the application of the M-score model in Vietnam is not yet popular. The number of research papers on the M-score model is small and there is no research using this model to assess the reliability of financial statements. Research results with actual data from the unaudited financial statements of a typical enterprise show that the application of the M-score model to assess the reliability or detect fraud of financial statements is an appropriate fit. However, the research team also found that the M-score model also has a high probability of incorrect identification of unreliable financial statements. Therefore, from the research results, we recommend that investors, shareholders, and stakeholders use a combination of the M-score model together with other technical analysis tools to be able to identify whether a financial statement is reliable.
KEYWORDS:
Financial statements, listed companies, M-score model, Reliability, Vietnam
REFERENCES:
1) Alfian, F., & Triani, N. N. A. (2019). Fraudulent financial reporting detection using beneish m-score model in public
companies in 2012-2016. Asia Pacific Fraud Journal, Volume 4, Nomor 1 (January-June) 2019, pp.27-42
2) Beneish, M. D. (1999). The Detection of Earnings Manipulation. Financial Analysts Journal, Vol. 55, No. 5 (Sep. - Oct., 1999),
pp.24-36. Published by: CFA Institute Stable
3) Ezrien, M., Kamal, M., Salleh, M.F.M., & Ahmad, A. (2016). Detecting financial statement fraud by Malaysian public listed
companies: The reliability of the Beneish M-Score model. Jurnal Pengurusan, 46, pp.23-32.
4) Hołda, A. (2020). Using the Beneish M-score model: Evidence from non-financial companies listed on the Warsaw Stock
Exchange. Investment Management & Financial Innovations, 17(4), pp.389-401.
5) Lotfi, N., & Chadegani, A. (2018). Detecting corporate financial fraud using Beneish M-score model. International Journal
of Finance & Managerial Accounting, 2(8), pp.29-34.
6) Nguyen, H. A., & Nguyen, H. L. (2016). Using the M-score model in detecting earnings management: Evidence from non-
financial Vietnamese listed companies. VNU Journal of Economics and Business, 32(2). pp.14-23
7) Sujeewa, M., & Kawshalya, P. (2020). Detecting red flags of corporate financial statement frauds using Beneish M score
model in Sri Lanka. International Journal of Accounting & Business Finance. Vol.6. No.2 December 2020 Issue, pp. 71 - 81
