Identification of a fraudulent organizational culture in enterprises listed in Warsaw stock exchange

Abstract

Purpose: This publication aims to verify the research hypothesis that it is possible to create a model predicting a fraudulent organizational culture in an enterprise. Design/Methodology/Approach: We estimated a logit model that would warn against fraud by employees, fraudulent financial reporting, and direct manipulation of the financial statements. The model would only caution about the possibility of the fraud risk and force a human analysis of such an entity. Findings: We searched for scams in the press and police investigations that ended with charges against directors, managers, and employees of enterprises where there was financial damage on a large scale. We were mainly looking for intentional and deliberate frauds. Practtical Implications: We created a model that warns which companies may have an unfair corporate culture for Polish companies listed on the WSE. Originality/Value: An element of the novelty in the publication is an attempt of a comprehensive approach to fraud, i.e., going beyond manipulating the financial result or penalties by the commission supervising the stock exchanges and financial markets.It is also one of the first fraud detection models which was designed for companies listed on the Warsaw Stock Exchange.