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Accounting-Fraud Indicator Signals Coming Economic Trouble

Accounting fraud is on the rise in Corporate America, raising concerns about the US economy. The M-Score reveals a disturbing pattern in the historical data.

1 min read
  • New research using the M-Score reveals a rise in earnings manipulation in Corporate America.
  • The M-Score is calculated from eight ratios on a company’s balance sheet.
  • The probability of manipulation usually rises rapidly in the quarters before the economy tips into recession.
  • Latest data shows that the collective probability of fraud across major companies is the highest in over 40 years.
  • The M-Score might be catching distress in the stages when some companies are taking steps to try to cover it up.
Accounting-Fraud Indicator Signals Coming Economic Trouble
A tool to identify corporate earnings manipulation finds the most risk in over 40 years
WSJJosh Zumbrun

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