Measuring fraud and earnings management by a case of study: Evidence from an international family business

  • Alicia Ramírez-Orellana Financial Economics and Bussines, University of Almería, Spain
  • María J. Martínez-Romero Financial Economics and Bussines, University of Almería, Spain
  • Teresa Mariño-Garrido Financial Economics and Accounting Department, IESIDE, University of Vigo, Spain
Keywords: Accounting fraud, Case study, Earnings management, Family business


The aim of this study is to estimate the probability of fraud and earnings management for a specific Spanish family business, Pescanova. In the context of financial statements, the Beneish model is used to detect fraudulent behavior. Our findings reveal that Pescanova presented propensity to commit fraud and carried out aggressive accounting practices before the disclosure of its financial problems. The manipulation index and the probability of manipulation are used as indicators of fraud and earnings management. Results also show that Pescanova made aggressive accounting practices, through the manipulation of Day's sales in receivables indexand Total accruals to total assets. Next, we provided evidence that the Sales Growth index and Leverage index are aligned with the position of technical default shown by the pre-bankruptcy board of Pescanova. Our main contribution is demonstrating the validity of the model for the case of Pescanova. Therefore, the application of the Beneish model might have detected fraudulent behavior, in the years prior to Pescanova's collapse.


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How to Cite
Ramírez-Orellana, A., Martínez-Romero, M. J., & Mariño-Garrido, T. (2017). Measuring fraud and earnings management by a case of study: Evidence from an international family business. European Journal of Family Business, 7(1-2).
Research Paper