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Fraudulent Financial Reporting: A Fraud Pentagon Analysis

Author

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  • Raisya Zenita

    (Universitas Riau, Pekanbaru, Indonesia Author-2-Name: Satria Tri Nanda Author-2-Workplace-Name: Universitas Lancang Kuning, Pekanbaru, Indonesia Author-3-Name: Neneng Salmiah Author-3-Workplace-Name: Universitas Lancang Kuning, Pekanbaru, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

Objective - The massive and broad impact caused by fraud has made it widely discussed by researchers. Several theories have been developed to explain the cause of fraud. The most recent theory that attempts to explain fraud is pentagon fraud. This study attempts to explain the effect of pentagon fraud on the detection of financial statement fraud in 624 companies listed on the Indonesian stock exchange. Methodology/Technique - Data from financial statements published in 2018 were analyzed using multiple regression analysis. Finding - The results of data analysis using E-Views have proven that Pressure, Opportunity, Arrogance and Rationalization have a negative effect on fraudulent financial reporting. However, competence is known to have no significant effect on fraudulent financial reporting. Novelty - The results suggest that human factors such as pressure, arrogance and rationalization encourage fraudsters to produce fraudulent financial reports. These findings imply that human factors such as pressure arrogance and rationalization are important to be considered in designing any anti-fraud strategy. Type of Paper - Empirical.

Suggested Citation

  • Raisya Zenita, 2019. "Fraudulent Financial Reporting: A Fraud Pentagon Analysis," GATR Journals afr181, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:afr181
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    More about this item

    Keywords

    Fraud Pentagon; Fraudulent Financial Report; Opportunity; Pressure.;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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