Fraud score analysis in emerging markets

Purpose – The purpose of this research is to determine the likelihood of financial statement manipulations in companies throughout a variety of emerging market countries and compare this potential wirh that of firms within the USA. Design/methodology/approach – The authors utilize the Fraud Score Model, as set forth by Dechow et al. , to determine the likelihood of financial statement manipulations. By adjusting their model to work in an international setting, the authors are able to study nine industries across 23 countries, including the USA. Findings – The results vary from industry to industry, with some countries performing extremely well in one industry, only to prove remarkably risky in the next. Originality/value – The findings may be used by a variety of market participants, especially investors, to determine the risk levels of potential foreign investments. Therefore, this research can help lead to a more overall efficient placement of global capital.