Exploring the Applicability of Benford’s Law in Decision-Making Models for Assessing the Quality of Financial Reporting: A Case Study of Polish Public Companies

Benford’s Law is a unique tool for evaluating the risk of data manipulation and irregularities. It is particularly useful for modeling accounting data manipulation in financial statements. As such, financial analysis and investment decisions are promised to be supported by Benford’s Law, regardless of the decision support model that is chosen. The aim of the paper is to evaluate the conformity of financial statements of Polish public companies with Benford’s law for further purpose to assess its applicability in financial reporting quality models. We showed that in general financial statements figures follow Benford’a law. Moreover, Benford’s Law is more closely followed by IFRS-based financial statements and consolidated financial statements that have been independently investigated than by domestically regulated and individual financial statements. Such findings support the potential for further application of Benford’s law in models using financial statements.