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Messod Daniel Beneish Screens

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Messod Daniel Beneish - Professor of Accounting at the Kelley School of Business, Indiana University.. Here follow a selection of stock screening strategies that we have modelled based on the writings of or about Messod Daniel Beneish. These strategies are not endorsed by the author.

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Beneish M-Score Screen

The Beneish M-Score is a checklist for identifying stocks that might be manipulating their earning figures. It was created by US finance Professor Messod Daniel Beneish and presented in a paper called The Predictable Cost of Earnings Manipulation. The M-Score is a red flag indicator that is often used as part of a short selling strategy. It calculates and distils eight different accounting variables into a single score. Generally, a score greater than -1.78 (i.e. a less negative or positive number) indicates an increased likelihood of a firm being an earnings manipulator. Beneish wrote: "We show that firms with a high probability of overstated earnings have lower future earnings, less persistent income-increasing accruals, and lower future returns." The M-score strategy apparently generated a hedged return of nearly 14% per year, mostly from the short positions. more »

Short Selling
5 Year Return: -39.3%
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  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
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