Deepa Mangala

Bio: Deepa Mangala is an academic researcher from Guru Jambheshwar University of Science and Technology. The author has contributed to research in topics: Stock market & Earnings management. The author has an hindex of 3, co-authored 15 publications receiving 39 citations.

Corporate Fraud Prevention and Detection: Revisiting the Literature

Abstract: Fraud has become a worldwide phenomenon and prime issue of concern. It dwells in all countries and affects all types of organisations irrespective of their size, profitability or industry. The primary objective of this paper is to provide an in-depth understanding of literature related to corporate fraud in order to understand ‘why’ fraud occurs and ‘how’ to combat it. Research studies published during the period commencing from the year 1984 to 2014 have been reviewed. The study aims to provide an in-depth discussion on significant red flags that may exist before fraud occurrence. It, also, provides a comprehensive view about fraud detection and prevention methods. Findings reveal that red flag is an important mechanism to prevent fraud. Application of single fraud detection technique will not curb the fraud effectively. Also, the top executives were found to be responsible for implementing anti-fraud policies and techniques within business organisation. Further, the present study tries to discern the research gap in existing literature and explore the area of future research.

Earnings Management and Performance of IPO Firms: Evidence from India:

Abstract: Disclosure through corporate annual reports is intended to enhance transparency and reduce information asymmetry during public issues. Ritter (1991) revealed that there is something fishy i...

Do corporate governance practices restrain earnings management in banking industry? Lessons from India

Abstract: Purpose This study aims to investigate the role of corporate governance practices in restraining earnings management in Indian commercial banks. Design/methodology/approach Estimation of earnings management is based on discretionary loan loss provision and discretionary realised security gains and losses using Beatty et al. (2002) model. The effect of corporate governance on earnings management is examined by performing two-way least square dummy variable regression. Data for a period of five years (2016–2020) is collected from the Centre for Monitoring Indian Economy ProwessIQ database, Reserve Bank of India website, annual report of banks, National Stock Exchange and bank’s website. Findings Regression results exhibit that number of board committees, size and independence of audit committee and joint audit are significantly effective in curbing earnings management. Other board-related variables (size, independence, meetings and diligence) and audit committee variables (meetings and diligence) are not effective in restraining earnings management in Indian banks. Practical implications The findings may prove to be helpful to regulators, board of directors and investors. It shows the weak area of corporate governance in India that is lack of autonomy to independent directors, which needs regulators attention and it also suggests that the number of independent auditors should be adequate for audit purposes. The board of directors must ensure the formulation of an adequate number of committees, which perform their own super specialised functions. This study brings an alarm to investors not to rely on reported earnings alone as they may be manipulated. Originality/value This paper substantiates the scant literature on the role of corporate governance practices in restraining earnings management in banks of emerging markets and to the best of the authors’ knowledge impact of joint audits on earnings management is previously unexplored in Indian banks, which are examined in this study.

Auditors’ Perceptions of the Effectiveness of Fraud Prevention and Detection Methods

Abstract: Fraud has emerged as an undesirable offshoot of human greed and pressure to perform in growing corporate world. It has led to erosion of stakeholders’ confidence across the globe. Now, they...

Corporate Fraud Prevention and Detection: Revisiting the Literature

Abstract: Fraud has become a worldwide phenomenon and prime issue of concern It dwells in all countries and affects all types of organisations irrespective of their size, profitability or industry The primary objective of this paper is to provide an in-depth understanding of literature related to corporate fraud in order to understand ‘why’ fraud occurs and ‘how’ to combat it Research studies published during the period commencing from the year 1984 to 2014 have been reviewed The study aims to provide an in-depth discussion on significant red flags that may exist before fraud occurrence It, also, provides a comprehensive view about fraud detection and prevention methods Findings reveal that red flag is an important mechanism to prevent fraud Application of single fraud detection technique will not curb the fraud effectively Also, the top executives were found to be responsible for implementing anti-fraud policies and techniques within business organisation Further, the present study tries to discern the research gap in existing literature and explore the area of future research

Analyzing the Existence of the Day of the Week Effect in Selected Emerging Country Stock Exchanges

Abstract: The presence of asymmetries in stock returns, known as seasonal anomalies, has been rigorously probed in the array of academic literature evaluating the validity of Efficient Market Hypothesis. Even though there is an abundance of studies focusing on the presence of the day of the week effect, no clear-cut findings have been documented in both developed and emerging market stock exchanges. This paper attempts to investigate whether the day of the week effect exists on an initial dataset of 33 developed stock indices in the period between 1999 and 2013. However, the final dataset encompasses 24 indices belonging to 16 countries due to statistical considerations. The significant findings as to negative Monday and positive Friday returns belong to 3 and 6 of the indices, respectively. Whereas none of the markets demonstrates any significant Tuesday returns, only two of the markets show significantly negative Wednesday returns. Additionally, significant and positive Thursday returns are observed in 2 of the indices. Therefore, no systematic pattern has been detected as to the presence of the day of the week effect in selected developed stock indices during the period analyzed.

Financial Reporting Fraud: Are Standards’ Setters and External Auditors Doing Enough?

Abstract: Following the fraud scandals in large companies like Enron, WorldCom, and Xerox, investors’ concern about fraud in general and fraudulent financial reporting in particular increased and is on the rise. In response to these concerns, auditing standards setters have issued fraud standards that have expanded what is required of the external auditors in relation to fraud detection. However, regardless of these efforts, academic research studies indicate that more efforts are still needed from audit regulators and external auditors. The current paper provides insights into two areas. Firstly, it explores the reasons behind the audit expectation gap, and secondly, it assesses the efforts of standards’ setters and external auditors to narrow the gap in relation to fraud detection. The paper provides a set of recommendations to regulators and external auditors in an effort to fight fraud.

An Analysis of Fraud Prevention and Detection in Not-for-Profit Organizations in the State of South Carolina

Abstract: This study analyzed fraud detection and prevention techniques and analyzed if there was a relationship between the techniques and the detection of fraud. The combined techniques were fraud risk assessment, fraud risk register, code of conduct, fraud assessment training, whistleblower policy, fraud control plan, fraud control policy, and internal control review. Nonprofits are vulnerable to fraud and costly for the organizations that rely heavily on donations to provide needed services or goods to a community. Through analyzing 109 nonprofits surveyed in South Carolina, the researcher found 59 reported fraud occurrences and 86 percent were using fraud detection and prevention techniques. This study showed statistical significance in the relationships between fraud prevention and detection techniques used in nonprofits and the detection of fraud. In this study, the results indicated the NFPOs in South Carolina had fraud detected and used the techniques which demonstrated a level of understanding prevention and detection techniques. This study helps internal stakeholders understand the theories and aspects of fraud to bring awareness to help prevent or detect fraud quicker.

Using Fraud Education to Deter Embezzlement in Small Construction Companies

Abstract: Fraud education is important in helping small business owners to formulate a strategy for the detection and deterrence of employee embezzlement. This research study was developed to examine cases of employee embezzlement within small construction contractors in efforts to determine the importance of fraud education and to identify factors leading to being victims. Participants were interviewed concerning their experiences with employee embezzlement schemes. The findings support the need for fraud education as none of the participants had any such education. Even those that had some formal business education expressed a lack of understanding of the principles of fraud. In addition to the lack of education, the findings also identified misappropriation of trust, a lack of oversight, and the weakness of internal controls as the common factors that played a part in the embezzlers’ ability to commit fraudulent activity. The analysis of the cases included in this study provide other small construction contractors with suggestions for areas that need attention in the quest to reduce the risk of being victims of employee embezzlement.

The Interaction between the Stock Market and Macroeconomic Policy Variables in South Africa

Abstract: The paper empirically examines the relationship between the stock market and macroeconomic policy variables in South African for the period from 1994 to 2012. The Johansen cointegration test and th...