Applying Benford's Law to individual financial reports : an empirical investigation on the basis of SEC XBRL filings

This study examines whether investors could use Benford's Law as an aid in determining high-risk areas for investing within their process of decision-making. The business reporting standard XBRL offers the opportunity to easily extract and analyze a sufficient number of monetary items out of single annual reports for statistical analysis purposes. Using SEC XBRL filings of S&P 500 companies (Fiscal Year 2010), we derive first digit distributions for single companies and measure the deviation from the Benford distribution. On average, we find that for all monetary numbers that are contained in the examined XBRL reports, the first digit distribution follows Benford's Law. A firm and industry-specific analysis reveals the industry Financials as being most conspicuous. Taken together, the empirical results suggest that the application of Benford's Law to annual reports might be a useful analytical tool for investors. -- Benford's Law ; XBRL ; Interactive Data ; SEC Filings ; Financial Statement Analysis ; Forensic Investing ; Benford’sches Gesetz ; SEC Veröffentlichungen ; Bilanzanalyse ; Bilanzfälschung