Economic Themes (2013) 51 (3) 6, 515-524

EXAMINING RELIABILITY OF LARGE FINANCIAL DATASETS USING BENFORD'S LAW


Konrad Grabinski, Zbigniew Paszek

Abstract: In the article, the authors have analyzed large financial datasets from the perspective of consistency with Benford’a law. Two groups of datasets have been investigated: selected accounting items reported by European publicly listed companies and profitability ratios. We argue that if datasets representing profitability components of financial ratios are reliable from Benford’s law perspective, also datasets representing financial ratios build on these accounting items are reliable. Presented study provides evidence that if large financial datasets are of high quality, also datasets constructed on previous datasets are of high quality.

Keywords:  Benford’s nford’s law; profitability ratios; reliability of financial data

PDF file