Using M-score Beneish Model to Measure the Creative Accounting: Evidence in Hanoi Stock Exchange Listed firms

Abstract

Creative accounting is a term for creative accounting methods, often used to deceive the reader of financial statements. However, using creative accounting to reduce taxes or increase profits is rare in Vietnam. Since 2017, the Ministry of Finance of Vietnam has issued regulations on accounting documents and fixed asset management to help businesses perform accounting in accordance with regulations and avoid the use of creative accounting. However, there are still some businesses that use innovative accounting methods to reduce taxes and increase profits, beautify their financial situation to attract more investment sources. The purpose of this paper is to systematize the basis theories related to the creative accounting and the M-score model, also identify the independent variables capable of detecting the creative economy, predicting the ability to detect ecotourism of the model is built and provide some solutions and recommendations to contribute to improving the applicability of the M-Score model to investors' investment decisions. The study uses the Beneish M-Score model to analyze 100 Hanoi Stock Exchange (HNX) listed firms. The results have shown that there are four M-score component, including TATA-Total Accrual on Total Assets, GMI-Gross Margin Index, SGI-Sales Growth Index and DSRI-Days Sales Receivable Index, have an influence on the firm’ detection of the ability to use the innovative accounting. This result solves the goal that identify the measurement capable of detecting the creative economy. This paper contributes to making recommendations on improving the applicability of the M-Score in the discovery of creative accounting.