Inconsistencies Signals from the Declared Patrimony of Politicians in Brazil: Application of Newcomb-Benford Law

22 Pages Posted: 14 Sep 2019

See all articles by Jonatas Sallaberry

Jonatas Sallaberry

UFSC - PPGC

Leonardo Flach

Universidade Federal de Santa Catarina (UFSC)

Mauricio Mello Codesso

Rutgers Business School - Rutgers University

Luiz Fernando Rodrigues

Catholic University of Brazil (UCB)

Date Written: September 5, 2019

Abstract

Goal: This research aims to seek evidence of inconsistencies or signs of fraud or other financial crimes in the assets declared by candidates for political office by applying the Newcomb-Benford Law (NB).

Theoretical foundation: The mainly empirical research is based on the ability of asset information to be useful to the analysis of economic and financial facts as well as in the NB Law capacity signal potential distortions in the statement of assets, considering the observed distribution and the expected.

Method: Law applies to NB, in relation to the first digit values of goods, compared with the distribution observed distribution expected from statistical tests and indicators (Nigrini, 2012). In the second stage, the digits are analyzed by differing relevance and the amount of deviation value (Bugarin & Cunha, 2015). The application of the criteria set by the NB and the average deviation identifies the items of potentially inconsistent declared goods.

Results: The first digit analysis identified six discrepant digits, two of which differ in quantities exceeding the waiting. In detail, after application of the methods, these digits it identified assets potentially inconsistent first digit values, including cash declared in cash in foreign and national currency, as a typical estate use in money laundering.

Contributions: search results demonstrate the application of the utility of NB Law to control agencies in the search for evidence of goods with potentially inconsistent or fraudulent values, and advances beyond the indication of convergence to NB to reveal the different items within the sample.

Keywords: Newcomb-Benford law; Fraud; elections; Cash

JEL Classification: C40, C50, C60, C80

Suggested Citation

Sallaberry, Jonatas and Flach, Leonardo and Mello Codesso, Mauricio and Fernando Rodrigues, Luiz, Inconsistencies Signals from the Declared Patrimony of Politicians in Brazil: Application of Newcomb-Benford Law (September 5, 2019). Available at SSRN: https://ssrn.com/abstract=3448476 or http://dx.doi.org/10.2139/ssrn.3448476

Jonatas Sallaberry (Contact Author)

UFSC - PPGC ( email )

Campus Universitario- Trindade
Florianopolis Santa Catarina
Brazil

HOME PAGE: http://lattes.cnpq.br/9920574928553347

Leonardo Flach

Universidade Federal de Santa Catarina (UFSC) ( email )

Campus Reitor João David Ferreira Lima
Bairro Trindade
Florianopolis, Santa Catarina 88040
Brazil

HOME PAGE: http://leonardoflach.paginas.ufsc.br/

Mauricio Mello Codesso

Rutgers Business School - Rutgers University

100 Rockafeller Rd, Piscataway, NJ 08854
100 Rockafeller Rd, Piscataway, NJ 08854
Piscataway, NJ New Jersey 08854
United States

Luiz Fernando Rodrigues

Catholic University of Brazil (UCB) ( email )

SGAN 916, Modulo B, Asa Norte
Brasília, DF 70790-160
Brazil

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