M. Agostini and G. Favero Accounting fraud, business failure and creative auditing: A micro-analysis of the strange case of Sunbeam Corp

This paper puts under a magnifying glass the path to failure of Sunbeam Corp. and emphasizes the reasons for its singularity and exceptionality. This corporate case emerges as an outlier from the analysis of the US fraud cases mentioned by WebBRD: the consideration of the time between fraud disclosure and the final bankruptcy reveals that the value of this temporal variable is estimated equal to 840 days in the case of Sunbeam, really far from the range estimated by the survival function for the entire sample. Different hypotheses explaining this exceptionality are evaluated in the paper, starting from the consideration of the peculiarities of Sunbeam’s history: fraud duration, scapegoating and creative auditing represent the three main points of analysis. Taking to heart the fact itself that the case under examination is an outlier, we perform a micro-analysis of this case that the SEC investigated in depth and this work describes in detail, providing unexpected insights and inputs for future research concerning auditing and accounting fraud.