The Influence of the COVID-19 Crisis on Financial Statements Manipulations in the Portuguese Wine and Tourism Sector

Purpose-This study aims to explore manipulation in financial statements during the COVID-19 crisis. The survey is focused on Portuguese companies from the tourism and wine production sectors. These sectors suffered from COVID-19 restrictions. Design/methodology/approach-Using Benford's Law tests will detect financial statement manipulations. Anomalies in empirical and theoretical distributions will be measured by MAD (Mean Absolute Deviation). The research sample comprises 13.006 companies from sectors NACE classification: 1102-Manufacture of wine from grape, 5510-Hotels and similar accommodation, 5610-Restaurants and mobile food service activities. The data is obtained from the BvD Orbis database. The sample is limited to 2018-2021, two years before (2018-2019) and two years during the COVID-19 crisis (2020-2021). Findings-Based on research results and the first digit Benford's test, we found no revenue manipulation in selected sectors in 2018-2021. Research limitations/implications-The study limitations include that the sample only concerns Portuguese companies meeting our criteria. Further research can also cover smaller and medium-sized companies and other industries. Practical implications-The study presents Benford's Law as a tool for detecting financial statement figures anomalies. Anomalies may be the result of fraud and intentional manipulations. Originality/value-The research article contributes to the current literature on fraud detection in financial statements. The study focuses on Portugal's crucial sectors: wine production and tourism.