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