COMPANY CHARACTERISTICS AND THE TENDENCY OF FRAUDULENT FINANCIAL REPORTING

ABSTRACT : Business environment dynamics may influence the companies performance. In those changing situations, the management is expected to satisfy the expectation of its shareholders, even in the worst position. This requires the management to accomplish various decisions, including those related to financial reporting. The management may tend to convey information about their achievement for the investor’s expectation through accounting numbers. Financial reporting is important as one of the tools that investors use to see deeper to the company. There are several legal ways to make up the report such as accounting method selection. On the other hand, there are also some illegal ways, such as fraud, and manipulation. This research is aimed to find the relation between company characteristics towards the tendency of fraudulent financial reporting. The research data are taken from the Indonesian Stock Exchange and Compustat from 2014 until 2018. The research uses a logistic regression model for data analysis. The result shows that company size, age, and management integrity have negative relation towards the tendency of fraudulent financial reporting. Contrary to the hypothesis, this research found that audit quality has a positive relation to the tendency of fraudulent financial reporting. This research can contribute to society as additional consideration for the investor. Keywords: Company characteristics, fraudulent financial report. ABSTRAK : Dinamika lingkungan bisnis dapat mempengaruhi kinerja perusahaan. Dalam situasi yang berubah tersebut, manajemen diharapkan dapat memenuhi harapan pemegang sahamnya, bahkan pada posisi yang paling buruk sekalipun. Hal ini menuntut manajemen untuk mengambil berbagai keputusan, termasuk yang terkait dengan pelaporan keuangan. Manajemen mungkin cenderung menyampaikan informasi tentang pencapaiannya untuk harapan investor melalui laporan keuangan. Pelaporan keuangan penting sebagai salah satu alat yang digunakan investor untuk melihat lebih dalam perusahaan. Ada beberapa cara legal untuk membuat laporan seperti pemilihan metode akuntansi. Di sisi lain, juga terdapat beberapa cara ilegal, seperti penipuan, dan manipulasi laporan keuangan. Penelitian ini bertujuan untuk mengetahui hubungan antara karakteristik perusahaan dengan kecenderungan pelaporan keuangan yang mengandung kecurangan. Data penelitian diambil dari Bursa Efek Indonesia dan Compustat dari tahun 2014 sampai dengan 2018. Analisis datanya menggunakan model regresi logistik. Hasil penelitian menunjukkan bahwa ukuran perusahaan, umur, dan integritas manajemen berhubungan negatif dengan kecenderungan kecurangan pelaporan keuangan. Bertentangan dengan hipotesis, penelitian ini menemukan bahwa kualitas audit berhubungan positif dengan kecenderungan kecurangan pelaporan keuangan. Penelitian ini dapat memberikan kontribusi kepada masyarakat sebagai pertimbangan tambahan bagi investor.Kata kunci: karakteristik perusahaan, laporan keuangan yang mengandung kecurangan.

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PENGARUH KUALITAS AUDIT TERHADAP FRAUDULENT FINANCIAL REPORTING DENGAN KOMITE AUDIT SEBAGAI VARIABEL MODERASI (Studi Empiris Pada Perusahaan Manufaktur yang terdaftar di BEI tahun 2016 – 2018)

PROSIDING SEMINAR NASIONAL CENDEKIAWAN ◽

10.25105/semnas.v0i0.5774 ◽

2019 ◽

pp. 2

Author(s):

Endah Catur Riyanti ◽

Hanna Christina W Putri ◽

Wikanto Artadi ◽

Haryono Umar

Keyword(s):

Empirical Evidence ◽

Financial Reporting ◽

Audit Committee ◽

Audit Quality ◽

Annual Report ◽

Stock Exchange ◽

Least Squares Regression ◽

Fraudulent Financial Reporting ◽

Insignificant Effect ◽

The Impact

This study aims to obtain empirical evidence the influence of Audit Quality on the Fraudulent Financial Reporting with Audit Committee as a Moderating Variable in Manufacture Companies listed in Indonesia’s Stock Exchange on 2016 – 2018. This paper uses generalised least squares regression to investigate the influence of Audit Quality on the Fraudulent Financial Reporting with Audit Committee as a moderating variable for a sample of manufacturing companies listed on Indonesia Stock Exchange over a three-year period from 2016 to 2018. The method of purposive sampling is used to gain the samples. The measurement of FFR is using Real Earning Management (Abnormal Cashflow). Audit Quality and Audit Committee are analyzed from the data within annual report. The result of the research findings show that Competence of Audit Committee has a positive insignificant effect on Fraudulent Financial Reporting. Meanwhile Audit Quality have a negative insignificant effect on Fraudulent Financial Reporting and Audit Committee strengthens positive insignificant of Audit Quality on Fraudulent Financial Reporting. The main contribution of this study is that it investigates Audit Committee strengthens influence of Audit Quality on Fraudulent Financial Reporting on Fraudulent Financial Reporting. Furthermore, this study is the initial paper to examine the impact of Audit Quality and Audit Committee on Fraudulent Financial Reporting in Indonesia.

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Determinan Fraudulent Financial Reporting Using Fraud Pentagon Analysis

Journal of Auditing Finance and Forensic Accounting ◽

10.21107/jaffa.v6i2.4938 ◽

2019 ◽

Vol 6 (2) ◽

pp. 105-114

Author(s):

Fidyah Quraini ◽

Yuni Rimawati

Keyword(s):

Financial Reporting ◽

Financial Stability ◽

Stock Exchange ◽

Institutional Ownership ◽

External Pressure ◽

Fraudulent Financial Reporting ◽

Financial Report ◽

External Auditors ◽

Monitoring Quality

This research aimed at knowing factors of fraudulent financial reporting using pentagon fraud analysis. This research analyzed the influence of financial target, financial stability, external pressure, institutional ownership, ineffective monitoring, quality of external auditors, change of auditors, change of directors, and number of CEO’s picture in fraudulent financial report. Sample in this research were 14 go public government companies from 2013 to 2017. Source of data in this research were secondary data in form of annual report in official website of Indonesia Stock Exchange. The examination of this research used logistic regression. The result of this study showed that the influence of external pressure expected fraudulent financial report, while financial target, financial stability, institutional ownership, ineffective monitoring, quality of external auditors, changing auditors, changing directors, and a number of CEO’s picture often did not influence the fraudulent financial reporting.

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DETERMINAN FRAUDULENT FINANCIAL REPORTING PADA PERUSAHAAN PERBANKAN DI INDONESIA DENGAN MENGGUNAKAN FRAUD PENTAGON THEORY

SIMAK ◽

10.35129/simak.v18i02.148 ◽

2020 ◽

Vol 18 (02) ◽

pp. 203-216

Author(s):

Ripa Fajarina Laming ◽

Adil Setiawan

Keyword(s):

Linear Regression ◽

Multiple Linear Regression ◽

Financial Reporting ◽

Annual Report ◽

Stock Exchange ◽

Sampling Technique ◽

Research Data ◽

Analysis Method ◽

Fraudulent Financial Reporting ◽

Effect Of Pressure

Fraudulent financial reporting is one of the most common types of fraud that occurs in Indonesia. This study looks at the determinants of fraud using the latest fraud theory, namely fraud pentagon theory. This study aims to analyze the effect of pressure, opportunity, rationalization, competence, and arrogance simultaneously on fraudulent financial reporting. The sampling technique in this study using purposive sampling. A sample of 26 banking companies listed on the Indonesia Stock Exchange (IDX) within 10 years. The research data uses the company's annual report for the period 2009-2018 obtained from the Indonesia Stock Exchange (IDX). The analysis method used is multiple linear regression using SPSS version 24. The results show that pressure, opportunity, rationalization, competence, and arrogance simultaneously have a positive and significant effect on fraudulent financial reporting.

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Fraudulent Financial Reporting: A Fraud Pentagon Analysis

GATR Journal of Accounting and Finance Review (AFR) Vol. 4 (4) Oct-Dec 2019 - GATR Accounting and Finance Review ◽

10.35609/afr.2019.4.4(2) ◽

2019 ◽

Vol 4 (4) ◽

pp. 106-113

Author(s):

Satria Tri Nanda ◽

Raisya Zenita ◽

Neneng Salmiah

Keyword(s):

Human Factors ◽

Financial Reporting ◽

Stock Exchange ◽

Jel Classification ◽

Recent Theory ◽

Fraudulent Financial Reporting ◽

Financial Statement Fraud ◽

Financial Reports ◽

Financial Report ◽

Negative Effect

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. Findings – 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 Keywords: Fraud Pentagon; Fraudulent Financial Report; Opportunity, Pressure. Reference to this paper should be made as follows: Nanda; S, T; Zenita R; Salmiah N; 2019. Fraudulent Financial Reporting: A Fraud Pentagon Analysis, Acc. Fin. Review 4 (4): 106 – 113. https://doi.org/10.35609/afr.2019.4.4(2) JEL Classification: M40, M41, M49.

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The Composition of Independent Board of Commissioner and Number of Board of Commissioner Meeting Towards Fraudulence of Financial Report (Empirical Study at Public Company Listed at Indonesia Stock Exchange in 2011-2017)

International Journal of Financial Research ◽

10.5430/ijfr.v10n4p96 ◽

2019 ◽

Vol 10 (4) ◽

pp. 96

Author(s):

Sudarman ◽

Aniqotunnafiah ◽

Masruri

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

Stock Exchange ◽

Descriptive Analysis ◽

Financial Statements ◽

Board Composition ◽

Fraudulent Financial Reporting ◽

Public Companies ◽

Financial Report ◽

Negative Effect

This study aims to obtain empirical evidence about the effect of corporate governance mechanisms on fraudulent financial reporting. The variables of corporate governance used are independent board composition, frequency of board commissioner meetings, and external auditor quality as moderating variables between the influences of independent board composition, number of board of commissioners meetings against fraudulent financial reporting. The population of this study was public companies listed on the Indonesia Stock Exchange in 2011 - 2017. The total samples of this study were 76 companies, consist of 38 companies reported committing fraudulently financial statements and 38 companies that did not cheat financial statements. Data analysis was carried out by descriptive analysis, crosstab and hypothesis testing using the logistic regression method. The results of this study indicate the composition of the independent board of commissioners and the frequency of board of commissioners meetings has a significant and negative effect on the fraudulent financial report. Also, the quality of external auditors can strengthen the influence of the composition of the independent board of commissioners and the number of board of commissioners meetings on the fraudulent financial reporting.

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DETERMINAN TIMELINESS OF FINANCIAL REPORTING PADA INDUSTRI MANUFAKTUR INDONESIA

Competitive Jurnal Akuntansi dan Keuangan ◽

10.31000/competitive.v2i1.467 ◽

2017 ◽

Vol 2 (1) ◽

pp. 73

Author(s):

Mohamad Zulman Hakim

Keyword(s):

Financial Reporting ◽

Manufacturing Industry ◽

Sampling Method ◽

Stock Exchange ◽

Financial Statements ◽

Company Size ◽

Return On Assets ◽

Financial Report ◽

Independent Variables ◽

Equity Ratio

This study aims to prove empirically the factors that affect the Timeliness of Financial Reporting. These factors are Return on Assets (ROA), Debt to Equity Ratio (DER), Company Size and Auditor Opinion as Independent Variables and Timeliness of Financial Statements as Dependent Variables.The population of this study is the Manufacturing Industry listed on the Indonesia Stock Exchange period 2012-2014. The sample was determined by purposive sampling method and 66 companies were obtained. The data used are obtained from the published company financial report. The method of analysis used is logistic regression at 5% significance level.Empirical study shows that ROA has significant effect on Timeliness of Financial Reporting. DER, Company Size and Auditor Opinion have no significant effect on Timeliness of Financial Reporting. Keywords: ROA, DER, Company Size, Auditor Opinion, Timeliness of Financial Reporting

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The relationship between knowledge-based economy and fraudulent financial reporting

Journal of Facilities Management ◽

10.1108/jfm-07-2021-0076 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Abbas Koolivand ◽

Mahdi Salehi ◽

Meysam Arabzadeh ◽

Hassan Ghodrati

Keyword(s):

Financial Markets ◽

Financial Reporting ◽

Fixed Effects ◽

Stock Exchange ◽

Fraudulent Financial Reporting ◽

Content Type ◽

Knowledge Based ◽

Robust Testing ◽

Knowledge Based Economy ◽

The Relationship

Purpose This paper aims to assess the relationship between a knowledge-based economy and fraudulent financial reporting. Design/methodology/approach The study is descriptive-correlation based on published information from enlisted firms on the Tehran Stock Exchange during 2013–2019 with a sample of 178 firms (1,246 observations). The method used for hypothesis testing is linear regression using the panel data. Findings The results show that a knowledge-based economy is associated negatively and significantly with financial reporting. Moreover, robust testing has also examined the hypotheses (including fixed effects, OLS and t + 1) that confirmed the study’s preliminary results. Originality/value As the study was carried out in the emergent financial markets, like Iran, to figure out the relationship between knowledge-based economy and financial reporting, it can provide helpful information for the practitioners in this field.

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Analysis of Factors Affecting Fraudulent Financial Reporting with Independent Commissioners as Moderation Variable

GATR Journal of Accounting and Finance Review (AFR) Vol. 4 (4) Oct-Dec 2019 - GATR Accounting and Finance Review ◽

10.35609/afr.2021.5.4(1) ◽

2021 ◽

Vol 5 (4) ◽

pp. 01-12

Author(s):

Andalia Andalia ◽

Amiruddin Amiruddin ◽

Grace T. Pontoh

Keyword(s):

Regression Analysis ◽

Financial Reporting ◽

Internal Control ◽

Sampling Method ◽

Stock Exchange ◽

Jel Classification ◽

Fraudulent Financial Reporting ◽

Factors Affecting ◽

Effect Of Pressure ◽

Analysis Technique

Objective - This study aims to examine and analyze the effect of pressure, opportunity, rationalization, ability and arrogance on fraudulent financial reporting with independent commissioners as the moderating variable. Methodology/Technique - The object of this research is all companies listed on the Indonesian Stock Exchange during 2019. The research sample was obtained through purposive sampling method and resulted in 215 companies. The analysis technique used is multiple regression analysis and Moderated Regression Analysis (MRA). Findings - The results show that pressure, opportunity, rationalization, ability and arrogance had a significant effect on fraudulent financial reporting. The results of the moderation regression analysis show that independent commissioners moderate the effect of pressure and arrogance on fraudulent financial reporting. Meanwhile, independent commissioners did not moderate opportunities, rationalization, and capacity for fraudulent financial reporting. Novelty - This research contributes to the pentagon fraud theory, which proves that the elements contained in this theory can be used as a basis for analyzing fraud committed by companies, and contributing to the company so that the company's internal control is improved and the presence of an independent board of commissioners is not only a fulfillment of the company's internal control. regulations made by the IDX. Type of Paper: Empirical. JEL Classification: G32, M21, M41, M42. Keywords: Pressure; Opportunities; Rationalization; Arrogance; Fraudulent Financial Reporting Reference to this paper should be made as follows: Andalia; Amiruddin; Pontoh, G.T. (2021). Analysis of Factors Affecting Fraudulent Financial Reporting with Independent Commissioners as Moderation Variable, Accounting and Finance Review, 5(4): 01 – 12. https://doi.org/10.35609/afr.2021.5.4(1)

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Pengaruh Kecurangan Laporan Keuangan terhadap Nilai Perusahaan: Ditinjau dari Perspektif Fraud Pentagon (Kasus di Indonesia)

Jurnal Ilmiah Universitas Batanghari Jambi ◽

10.33087/jiubj.v20i1.828 ◽

2020 ◽

Vol 20 (1) ◽

pp. 121

Author(s):

Desi Elviani ◽

Syahril Ali ◽

Rahmat Kurniawan

Keyword(s):

Financial Reporting ◽

Firm Value ◽

Stock Exchange ◽

Sample Selection ◽

Financial Statement ◽

Fraudulent Financial Reporting ◽

Financial Statement Fraud ◽

Company Value ◽

Negative Effect ◽

Five Elements

This study aims to examine how the influence of fraudulent financial reporting on firm value is viewed from the perspective of a pentagon fraud with a sample of 71 companies from the infrastructure, utilities and transportation sectors in the Indonesia Stock Exchange in 2014-2018. The sample selection used was purposive sampling method. Company value is measured by price book value, financial statement fraud is measured by fraud-score models. There are two variables that have a positive and significant influence, namely the opportunity and arrogance variables, the two variables present two of the five elements of pentagon fraud, where as the three variables, pressure, rasionalization, competence, do not affect the fraudulent financial reporting. The results of this study have proven that fraudulent financial reporting has a negative effect on firm value.

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Pengaruh Elemen-Elemen Fraud Pentagon Terhadap Kecurangan Laporan Keuangan

JURNAL EKSPLORASI AKUNTANSI ◽

10.24036/jea.v2i4.292 ◽

2020 ◽

Vol 2 (4) ◽

pp. 3405-3418

Author(s):

Alfamet Randa ◽

Sany Dwita

Keyword(s):

Logistic Regression ◽

Regression Analysis ◽

Data Analysis ◽

Financial Reporting ◽

Stock Exchange ◽

Empirical Studies ◽

Sampling Technique ◽

Fraudulent Financial Reporting ◽

Real Estate Sector ◽

Final Sample

This study aims to determine the effect of pentagon fraud’s theory in detecting fraudulent financial reporting empirical studies on companies in property and real estate sector in Indonesia listed on the Stock Exchange in 2014-2018. The sampling technique used purposive sampling with the final sample of 18 companies. Data analysis used in this research is logistic regression analysis. The result of this research showed that : Pressure (ROA), Opportunity (BDOUT), Competence (DCHANGE) and Arogance (CEOPIC) have no significant effect on fraudulent financial reporting. While the Rationalization (Change of Auditor) has a significant effect on fraudulent financial reporting.

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