Benford's law first significant digit and distribution distances for testing the reliability of financial reports in developing countries

Abstract

We discuss a common suspicion about reported financial data, in 10 industrial sectors of the 6 so called "main developing countries" over the time interval [2000-2014]. These data are examined through Benford's law first significant digit and through distribution distances tests. It is shown that several visually anomalous data have to be a priori removed. Thereafter, the distributions much better follow the first digit significant law, indicating the usefulness of a Benford's law test from the research starting line. The same holds true for distance tests. A few outliers are pointed out.

22 pages, 34 references, 4 figures, 7 tables; to be published in Physica A

References in corpus (4)

• Benford's law and Theil transform of financial data
• Benford's law predicted digit distribution of aggregated income taxes: the surprising conformity of Italian cities and regions
• Data science for assessing possible tax income manipulation: The case of Italy
• Benford's law: a 'sleeping beauty' sleeping in the dirty pages of logarithmic tables

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