Identification of fraudulent financial statements using linguistic credibility analysis

Sean L. Humpherys, Kevin C. Moffitt, Mary B. Burns, Judee K. Burgoon, William F. Felix

Research output: Contribution to journalArticlepeer-review

225 Scopus citations


The strategic use of deceptive language in managerial financial fraud is investigated with linguistic cues extracted from 202 publicly available financial disclosures. Those crafting fraudulent disclosures use more activation language, words, imagery, pleasantness, group references, and less lexical diversity than non-fraudulent ones. Writers of fraudulent disclosures may write more to appear credible while communicating less in actual content. A parsimonious model with Naïve Bayes and C4.5 achieved the highest classification accuracy. Results support the potential use of linguistic analyses by auditors to flag questionable financial disclosures and to assess fraud risk under Statement on Auditing Standards No. 99.

Original languageEnglish (US)
Pages (from-to)585-594
Number of pages10
JournalDecision Support Systems
Issue number3
StatePublished - Feb 2011


  • Classification
  • Deception
  • Financial fraud
  • Fraud risk
  • SAS 99
  • Text mining

ASJC Scopus subject areas

  • Management Information Systems
  • Information Systems
  • Developmental and Educational Psychology
  • Arts and Humanities (miscellaneous)
  • Information Systems and Management


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