Affiliation:
1. University of Washington Tacoma
Abstract
ABSTRACT
In this paper, we use a Genetic Algorithm (GA) and MARLEDA—a modern Estimation of Distribution Algorithm (EDA)—to evolve and train several fuzzy rule-based classifiers (FRBCs) to detect patterns of financial statement fraud. We find that both GA and MARLEDA demonstrate a better ability to classify unseen corporate data observations than those of a traditional logistic regression model, and provide validity for detecting financial statement fraud with Evolutionary Algorithms (EAs) and FRBCs. Using ten-fold cross-validation, the GA and MARLEDA yield average training classification accuracy rates of 75.47 percent and 74.26 percent, respectively, and average validation accuracy rates of 63.75 percent and 64.46 percent, respectively.
Publisher
American Accounting Association
Subject
Computer Science Applications,Accounting
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