Assessment of earnings manipulation in the banking sector: An analysis on selected Indian banks

Earnings manipulation is often conducted to misrepresent the true financial health of a business enterprise. This can be carried out either through fraudulent accounting practices or material misstatement that fails to reflect the real profitability of an enterprise. There have been instances of financial scams and banking frauds in recent years resulting into huge amount of non-performing assets. The present paper aims to examine evidences of earnings manipulation of India’s top-3 listed banks namely HDFC Bank, ICICI Bank and State Bank of India, following their recognition as risk-free banks. The study thus makes an attempt to detect the possibilities of material misstatement by the selected Indian banks using the popularly used Beneish M-score model (1999), Roxas M-score model (2011) and Montier C-score model (2008) for the current financial year 2023-24. ICICI Bank scores were found to be satisfactory, though contradictory scores observed in case of the other two banks.