Beneish model in revealing creative accounting practices: An empirical study on BIST companies

In-business or non-operating financial information users require financial and non-financial information from businesses. It is very important that this information is provided in a transparent, accurate and fair manner that can respond to the needs of users. Creative accounting practices are among the methods businesses often apply to resort to manipulation. Creative accounting at this point is expressed as misleading presentation of financial statements, taking advantage of loopholes. Businesses are able to achieve positive results in the short term when they use creative accounting practices and face extremely negative consequences in the long term. In particular, in the early 2000s, there were financial scandals involving large businesses such as Enron, Worldcom, Parmalat, which resulted in bankruptcy. At the same time, due to the Enron incident, an international audit business, Arthur Andersen's audit license was revoked due to irregularities, and creative accounting became important and became frequently discussed in the literature. Whether businesses manipulate financial information is sought to be detected through various models. The study used the Beneish Model and the Beneish TR model from which the model was adapted to Turkey. It is thought the research will contribute to the literature, with the study taking into account the financial statements of businesses for multiple periods. The study sought to be detected by the original version of the Beneish Model and the Beneish Model TR, whether they manipulated/did so by leveraging data from businesses in the Chemistry, Pharmaceutical, Petroleum, Tyre and Plastic Product sector traded in the KAP (Public Lighting Platform). As a result of the study, as a result of Zi values calculated in 2019 with Beneish original and Beneish TR equations, 2 businesses in both applications were found to be risky and 7 businesses were high risk. As a result of the Zi values calculated with Beneish original and Beneish TR equations in 2020, 1 business in both applications was found to be risky and 10 businesses were found to be high risk. In 2019-2020, 23 businesses were found to be high risk as a result of Zi values calculated by Beneish original equation. As a result of the Zi values calculated in the Beneish TR equation in 2019-2020, it has been concluded that 3 businesses are risky and 1 business is high risk. Keywords: Creative Accounting, Financial İnformation Manipulation, Beneish Model, Public Lighting Platform.