We test the predictability of investment fraud using a panel of mandatory disclosures filed with the SEC. We find that disclosures related to past regulatory and legal violations, conflicts of interest, and monitoring have significant power to predict fraud. Avoiding the 5% of firms with the...

The paper provides a cost-based explanation for decision makers' reluctance to use fraud prediction models, particularly as these models have nearly doubled their success at identifying fraud (true positive rates) when compared to the initial models in Beneish (1997, 1999). We estimate the costs...

In their role as "gatekeepers," the courts are often faced with the issue of assessing the reliability of complex expert testimony in a variety of disciplines. In the area of finance and economics, two recent federal decisions concluded that the "S-curve" approach, which has been described as a...