Probable earning manipulation and fraud in banking sector. Empirical study from East Africa

Figures & data

Table 1. Normality test

	Shapiro-Wilk
	Statistic		Sig.
DSRI	0.915		0.125
GMI	0.956		0.147
AQI	0.886		0.478
SGI	0.881		0.233
DEPI	0.901		0.123

Table 2. Test results of heteroscedasticity

	LM	Sig
BP	5.896	0.197
Koenker	6.052	0.205

Table 3. Test of multicollinearity results

Model		Collinearity Statistics
		Tolerance		VIF
1	(Constant)
	DSRI		.818	1.222
	GMI		.696	1.436
	AQI		.881	1.135
	SGI		.819	1.220
	DEPI		.699	1.430

Table 4. Autocorrelation test results

Model	R	R Square	Adjusted R Square	Std. Error of the Estimate	Durbin-Watson
1	.572^a	.328	.203	.371	2.246

a. Predictors: (Constant), DEPI, SGI, AQI, DSRI, GMI

b. Dependent Variable: Manipulator

Table 5. Kenyan banks classification

Bank Code	DSRI	GMI	AQI	SGI	DEPI	M-Score	Code
1	1.125	0.997	0.912	1.055	0.932	−2.8389	0
2	1.369	1.532	1.236	1.305	1.009	−1.7737	1
3	0.992	1.364	1.971	1.217	1.603	−1.7999	1
4	0.983	0.208	1.702	1.204	1.201	−3.0665	0
5	1.044	1.224	0.964	0.887	0.987	−2.7836	0
6	1.115	0.933	1.213	0.926	0.906	−2.8219	0
7	0.929	1.003	0.867	1.045	1.209	−2.9990	0
8	0.987	1.002	1.227	0.908	0.872	−2.8729	0
9	1.002	1.078	0.963	1.055	1.074	−2.8213	0
10	1.104	0.808	1.127	1.022	0.981	−2.9183	0
11	1.361	0.923	0.994	0.783	1.403	−2.8077	0
12	0.825	0.854	1.236	1.127	1.155	−2.9477	0
13	0.992	1.054	0.987	1.009	1.204	−2.8561	0
14	0.945	1.009	1.147	1.104	0.908	−2.8042	0
15	1.334	1.224	1.645	0.982	0.876	−2.0849	1
16	1.994	−0.532	1.105	0.947	2.005	−3.3571	0
17	1.001	0.75	0.909	0.998	0.913	−3.2094	0
18	1.524	1.222	1.311	1.041	1.003	−2.0725	1
19	0.986	1.122	0.258	1.117	0.971	−3.1792	0
20	1.008	2.104	1.207	1.273	1.125	−1.5803	1
21	1.203	1.257	1.023	1.627	1.047	−2.0509	1
22	1.009	1.109	0.884	1.077	1.027	−2.8235	0
23	1.124	0.890	0.975	1.005	0.843	−2.9446	0
24	1.942	1.889	1.026	1.052	1.207	−1.2634	1
25	1.054	1.044	0.987	0.923	1.117	−2.8851	0
26	1.006	1.036	0.943	1.112	0.924	−2.8431	0
27	1.222	1.045	0.908	0.986	0.998	−2.7603	0
28	1.683	−0.227	1.014	0.809	1.309	−3.5641	0
29	1.024	−2.043	1.708	0.983	1.478	−5.1974	0
30	1.245	0.710	1.304	1.008	0.331	−2.8657	0
31	0.908	1.117	0.936	1.109	0.942	−2.8547	0
32	1.001	1.112	1.113	0.963	1.009	−2.7753	0
33	0.994	1.024	1.201	1.008	0.823	−2.7962	0
34	1.078	1.002	0.854	1.045	0.908	−2.9172	0

Table 6. Classification of Tanzanian banks

Bank Code	DSRI	GMI	AQI	SGI	DEPI	M-Score	Code
1	1.535	0.653	0.912	1.055	1.115	−2.7935	0
2	0.875	0.948	0.825	0.982	1.124	−3.1724	0
3	0.992	1.241	0.825	1.017	1.306	−2.7661	0
4	0.983	0.208	1.702	1.204	1.201	−3.0665	0
5	1.430	0.988	0.964	0.752	0.987	−2.7765	0
6	1.804	0.933	1.213	1.045	0.906	−2.1695	1
7	0.929	1.003	0.867	1.045	1.209	−2.9990	0
8	1.231	1.002	1.005	0.908	0.854	−2.8057	0
9	1.002	1.078	0.987	1.055	1.287	−2.7843	0
10	0.993	0.864	1.410	1.022	0.981	−2.7911	0
11	1.045	0.923	1.439	0.783	1.403	−2.8039	0
12	0.921	1.110	1.054	0.984	1.155	−2.8472	0
13	1.023	1.080	0.987	1.022	1.204	−2.7977	0
14	1.334	1.202	1.915	1.104	0.908	−1.8538	1
15	0.945	1.024	1.114	0.982	0.876	−2.9011	0
16	1.274	0.562	1.105	0.947	2.005	−2.9585	0
17	1.114	0.851	1.051	1.008	1.141	−2.9091	0
18	1.085	1.004	0.789	1.041	1.003	−2.9408	0
19	0.965	1.008	0.258	1.117	0.971	−3.2998	0
20	0.885	2.074	1.207	1.273	1.125	−1.7087	1
21	1.045	0.904	1.023	1.112	1.047	−2.8700	0
22	1.014	1.117	0.884	1.077	0.963	−2.8190	0
23	0.334	0.929	0.975	1.005	0.843	−3.5595	0
24	2.004	1.214	1.026	1.052	1.207	−1.8240	1
25	0.994	0.951	0.987	1.028	1.117	−2.9434	0
26	0.873	1.704	1.411	1.305	0.924	−1.9314	1
27	1.094	1.070	0.908	0.986	0.998	−2.8430	0
28	0.739	−0.547	1.014	0.809	1.309	−4.6310	0
29	0.904	1.102	1.233	0.983	1.115	−2.7673	0
30	1.004	0.997	1.002	1.109	0.854	−2.8547	0

Table 7. Classification of Ugandan banks

Bank Code	DSRI	GMI	AQI	SGI	DEPI	M-Score	Code
1	1.451	1.327	2.115	0.997	0.901	−1.6031	1
2	0.908	0.986	1.452	0.904	0.941	−2.8145	0
3	1.241	0.862	0.988	0.804	0.932	−3.0006	0
4	1.305	1.231	0.445	0.852	0.974	−2.8967	0
5	1.221	1.140	0.895	2.036	1.092	−1.9199	1
6	1.204	0.994	0.967	1.023	0.847	−2.7760	0
7	0.924	1.001	0.899	1.334	0.965	−2.8048	0
8	1.352	1.374	1.347	0.874	0.782	−2.1984	1
9	0.997	1.903	−0.225	0.992	0.642	−2.8738	0
10	1.210	0.864	0.654	1.331	0.773	−2.8615	0
11	1.304	1.425	1.425	1.226	0.978	−1.8720	1
12	0.981	0.814	−2.004	0.888	1.045	−4.9600	0
13	1.045	1.552	1.324	1.245	0.991	−2.0150	1
14	1.225	0.945	2.054	1.147	1.004	−2.0528	1
15	1.963	−0.772	1.504	1.052	0.991	−3.3967	0
16	1.275	0.476	1.025	0.887	1.111	−3.2217	0
17	1.421	−0.245	1.115	0.927	0.725	−3.7141	0
18	1.140	1.042	0.997	0.983	0.884	−2.7921	0
19	1.845	0.864	0.452	0.849	0.963	−2.7840	0
20	0.739	1.070	1.192	0.985	1.478	−2.9161	0

Table 8. Non-Manipulators averages based on Beneish M-score

Variable	DSRI	GMI	AQI	SGI	DEPI
Benchmark	1.0964	0.8093	0.9579	1.0009	1.0571

Table 9. Probit regression coefficient

Parameter	Coefficients
(Intercept)	−67.954
DSRI	16.536
GMI	16.972
AQI	12.848
SGI	12.363
DEPI	−0.007
(Scale)	1^a
Likelihood Ratio Chi-Square	87.289
df	5
Sig	0.000

Table 10. Benchmark and revised variables

Variable	DSRI	GMI	AQI	SGI	DEPI	Intercept	M-Score
Benchmark	1.0964	0.8093	0.9579	1.0009	1.0571
Parameters	16.536	16.972	12.848	12.363	−0.007	−67.954	−11.4147

Table 11. Probit regression revised M-score results of Kenyan banks

Bank Code	DSRI	GMI	AQI	SGI	DEPI	Revised M-Score	Code
1	1.125	0.997	0.912	1.055	0.932	−7.676	0
2	1.369	1.532	1.236	1.305	1.009	12.692	0
3	0.992	1.364	1.971	1.217	1.603	11.957	0
4	0.983	0.208	1.702	1.204	1.201	−11.425	1
5	1.044	1.224	0.964	0.887	0.987	−6.572	0
6	1.115	0.933	1.213	0.926	0.906	−6.655	0
7	0.929	1.003	0.867	1.045	1.209	−11.519	1
8	0.987	1.002	1.227	0.908	0.872	−7.643	0
9	1.002	1.078	0.963	1.055	1.074	−7.681	0
10	1.104	0.808	1.127	1.022	0.981	−8.877	0
11	1.361	0.923	0.994	0.783	1.403	−7.342	0
12	0.825	0.854	1.236	1.127	1.155	−10.013	0
13	0.992	1.054	0.987	1.009	1.204	−8.515	0
14	0.945	1.009	1.147	1.104	0.908	−6.824	0
15	1.334	1.224	1.645	0.982	0.876	8.148	0
16	1.994	−0.532	1.105	0.947	2.005	−18.120	1
17	1.001	0.75	0.909	0.998	0.913	−14.662	1
18	1.524	1.222	1.311	1.041	1.003	7.693	0
19	0.986	1.122	0.258	1.117	0.971	−15.489	1
20	1.008	2.104	1.207	1.273	1.125	15.661	0
21	1.203	1.257	1.023	1.627	1.047	6.523	0
22	1.009	1.109	0.884	1.077	1.027	−7.782	0
23	1.124	0.89	0.975	1.005	0.843	−9.317	0
24	1.942	1.889	1.026	1.052	1.207	22.398	0
25	1.054	1.044	0.987	0.923	1.117	−8.722	0
26	1.006	1.036	0.943	1.112	0.924	−7.879	0
27	1.222	1.045	0.908	0.986	0.998	−6.162	0
28	1.683	−0.227	1.014	0.809	1.309	−20.956	1
29	1.024	−2.043	1.708	0.983	1.478	−51.608	1
30	1.245	0.71	1.304	1.008	0.331	−6.103	0
31	0.908	1.117	0.936	1.109	0.942	−8.252	0
32	1.001	1.112	1.113	0.963	1.009	−6.330	0
33	0.994	1.024	1.201	1.008	0.823	−6.251	0
34	1.078	1.002	0.854	1.045	0.908	−9.237	0

Table 12. Probit regression revised M-score results of Tanzanian banks

Bank Code	DSRI	GMI	AQI	SGI	DEPI	Revised M-Score	Code
1	1.535	0.653	0.912	1.055	1.115	−6.736	0
2	0.875	0.948	0.825	0.982	1.124	−14.663	1
3	0.992	1.241	0.825	1.017	1.306	−7.324	0
4	0.983	0.208	1.702	1.204	1.201	−11.425	1
5	1.43	0.988	0.964	0.752	0.987	−5.864	0
6	1.804	0.933	1.213	1.045	0.906	6.209	0
7	0.929	1.003	0.867	1.045	1.209	−11.519	1
8	1.231	1.002	1.005	0.908	0.854	−6.460	0
9	1.002	1.078	0.987	1.055	1.287	−7.374	0
10	0.993	0.864	1.41	1.022	0.981	−6.126	0
11	1.045	0.923	1.439	0.783	1.403	−6.850	0
12	0.921	1.11	1.054	0.984	1.155	−8.187	0
13	1.023	1.08	0.987	1.022	1.204	−7.400	0
14	1.334	1.202	1.915	1.104	0.908	12.752	0
15	0.945	1.024	1.114	0.982	0.876	−8.501	0
16	1.274	0.562	1.105	0.947	2.005	−11.458	1
17	1.114	0.851	1.051	1.008	1.141	−9.133	0
18	1.085	1.004	0.789	1.041	1.003	−9.973	0
19	0.965	1.008	0.258	1.117	0.971	−17.772	1
20	0.885	2.074	1.207	1.273	1.125	13.118	0
21	1.045	0.904	1.023	1.112	1.047	−8.447	0
22	1.014	1.117	0.884	1.077	0.963	−7.563	0
23	0.334	0.929	0.975	1.005	0.843	−21.718	1
24	2.004	1.214	1.026	1.052	1.207	11.968	0
25	0.994	0.951	0.987	1.028	1.117	−9.995	0
26	0.873	1.704	1.411	1.305	0.924	9.658	0
27	1.094	1.07	0.908	0.986	0.998	−7.855	0
28	0.739	−0.547	1.014	0.809	1.309	−41.997	1
29	0.904	1.102	1.233	0.983	1.115	−6.316	0
30	1.004	0.997	1.002	1.109	0.854	−7.852	0

Table 13. Probit regression revised M-score results of Ugandan banks

Bank Code	DSRI	GMI	AQI	SGI	DEPI	Revised M-Score	Code
1	1.451	1.327	2.115	0.997	0.901	18.055	0
2	0.908	0.986	1.452	0.904	0.941	−6.380	0
3	1.241	0.862	0.988	0.804	0.932	−10.176	0
4	1.305	1.231	0.445	0.852	0.974	−9.238	0
5	1.221	1.14	0.895	2.036	1.092	8.247	0
6	1.204	0.994	0.967	1.023	0.847	−6.109	0
7	0.924	1.001	0.899	1.334	0.965	−7.650	0
8	1.352	1.374	1.347	0.874	0.782	5.828	0
9	0.997	1.903	−0.225	0.992	0.642	−9.801	0
10	1.21	0.864	0.654	1.331	0.773	−8.429	0
11	1.304	1.425	1.425	1.226	0.978	11.253	0
12	0.981	0.814	−2.004	0.888	1.045	−52.693	1
13	1.045	1.552	1.324	1.245	0.991	8.062	0
14	1.225	0.945	2.054	1.147	1.004	8.904	0
15	1.963	−0.772	1.504	1.052	0.991	−16.274	1
16	1.275	0.476	1.025	0.887	1.111	−14.665	1
17	1.421	−0.245	1.115	0.927	0.725	−22.834	1
18	1.14	1.042	0.997	0.983	0.884	−6.462	0
19	1.845	0.864	0.452	0.849	0.963	−6.485	0
20	0.739	1.07	1.192	0.985	1.478	−10.092	0