Potentiality of Benford’s law in deriving a firm-level evasion indicator for Italy

Key Points

• Benford's law can effectively identify discrepancies in financial data, supporting the detection of evasion.
• The evasion indicator derived through statistical analysis offers a novel approach to assessing firm-level compliance.
• Utilizing Benford's law allows for enhanced data integrity checks, improving financial transparency and trust.
• These findings indicate a need for broader application of such methods in regulatory frameworks to combat fraud.