Motivation and Risk Behind Financial Statement Fraudulence Using Fraud Theory

Nico Alexander; Novia Wijaya; Friska Firnanti

doi:10.24912/ja.v29i2.2926

Authors

Nico Alexander Department of Accounting, Trisakti School of Management, Jakarta
Novia Wijaya Department of Accounting, Trisakti School of Management, Jakarta
Friska Firnanti Department of Accounting, Trisakti School of Management, Jakarta

DOI:

https://doi.org/10.24912/ja.v29i2.2926

Keywords: Fraud; Financial Statement; Fraud Theory; F-Score.

Abstract

Financial information is a critical resource for users of financial statements in their decision-making processes. However, errors in decision-making can arise from management's fraudulent activities within these financial statements. Such actions primarily benefit management while adversely affecting other stakeholders. Consequently, this study explores the motivations behind management's engagement in fraudulent practices in financial reporting, utilising established fraud theories, including the triangle, diamond, pentagon, and hexagon models. The research focuses on cyclical and non-cyclical sector companies listed on the Indonesia Stock Exchange from 2020 to 2022, with a sample of 152 companies selected through purposive sampling. Logistic regression analysis is employed to test the hypotheses. The findings indicate that, according to each theoretical framework, the motivations for fraud stem from pressures to sustain the company's financial stability and the opportunities and collusion available to perpetrate such fraud.

Author Biographies

Nico Alexander, Department of Accounting, Trisakti School of Management, Jakarta

nico@stietrisakti.ac.id

Novia Wijaya, Department of Accounting, Trisakti School of Management, Jakarta

novia@stietrisakti.ac.id

Friska Firnanti, Department of Accounting, Trisakti School of Management, Jakarta

friska@stietrisakti.ac.id

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