Fraud hexagon, financial condition, gender of independent commissioners, and fraudulent financial reporting
DOI:
https://doi.org/10.33021/jaaf.v9i2.6330Keywords:
stimulus/pressure, capability, collusion, opportunity, rationalization, ego, fraudulent financial reporting, gender diversity, independent commissionersAbstract
Fraudulent financial reporting is one of the crucial problems in the world of accounting. Every company certainly wants its financial reports to appear in good condition so that they can attract investors and creditors. However, these demands can encourage management to demonstrate the good condition of the company by committing fraudulent financial reports. Thus, this research was conducted to test several factors that can influence the occurrence of fraudulent financial statements. These seven factors are called the fraud hexagon which consists of pressure, capability, collusion, opportunity, rationalization, and ego/arrogance. This research also adds one additional factor, namely the company's financial condition, as well as one moderating variable, namely gender differences in independent commissioners. Data obtained through purposive sampling was 104 samples of healthcare sector companies for the 2017-2024 periods. This research found that pressure, collusion and financial conditions had a positive influence on fraudulent financial reporting, while capability, opportunity, rationalization and ego had no influence on fraudulent financial reporting. Furthermore, gender diversity in independent commissioners can moderate to weaken the influence of pressure on fraudulent financial reporting, but cannot moderate the influence of capability, collusion, opportunity, rationalization and arrogance on fraudulent financial reporting. Thus, Firms should reduce pressure and collusion while strengthening gender-diverse independent boards to curb financial reporting fraud.
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