digit analysis can be used to detect allocations affected by
managerial interventions. We are unaware of any study applying the Benford test to
internal capital markets, while this approach appears very useful in this context. It is
commonly used in the auditing, financial accounting, and fraud detection literature.
JEL classification: C16, G21, G31.
Keywords: Internalcapitalallocation; the Benford law; managerial
The allocation of scarce resources to the subunits and divisions represents a cru-
cial process in conglomerate firms. The
, charitable foundations and trusts or private sector entities. Recipients are often non-profit entities and educational institutions, but can also be individuals and businesses. Today, grants remain the most widely practiced model of financing social entrepreneurs. In spite of the advantage of providing capital at zero cost, there are important limitations to grant funding. First, grants are typically project specific. They exclude overhead and business development costs, and do not provide full internalcapitalallocation flexibility. Second, grants typically face a