BENEISH M-SCORE AS FRAUD INDICATOR: COMPARATIVE ANALYSIS FOR CROATIAN AND GERMAN COMPANIES

The main purpose of this paper is to determine trends and differences in financial statement frauds between Croatian and German observed companies. Fraud in the financial statement was measured using the M-score model and the research period was from 2018 to 2023. The research sample consisted of 29 companies included in the DAX (German stock market index) and 31 companies listed on Croatian stock market in the observed period. According to research results, the M-score can be used as a tool for fraud detection in both observed markets, and different users of financial statements can use this model to detect potential manipulations in financial statements. Results show that, in the whole observed period, most German companies were classified as non-manipulators, and the results were stable throughout the observed period. For the Croatian sample, number of companies classified as non-manipulators is decreasing, while on the other side, number of those classified as probably or likely manipulated is increasing. Such results indicate the existence of certain differences in fraudulent behavior of listed companies in the two observed countries, and that there are more warning signs and red flags of fraudulent behavior detected on a sample of Croatian companies.