Exploring Factors Behind Fraudulent Financial Reporting In The Banking Sectors Of Indonesia And Malaysia: An Revised Beneish M-Score Investigation
Keywords:
Beneish M-Score revised, fraud, financial statement fraud, hexagon fraud theoryAbstract
This study aims to provide a fresh perspective on the Beneish M-Score model, which has been widely used by researchers to analyze the potential for financial statement fraud. This study specifically focuses on the revised benefit M-score method. The research objects are banks in ASEAN countries, namely Indonesia and Malaysia, from 2017 to 2021, with a sample size of 260 banks. To produce a better approach, this study adopts a probit regression approach to develop a new Beneish M-Score. The probit regression approach is applied based on the existing Beneish model with the goal of reclassifying the status of these banks as having indications of fraud. This finding confirms that the revised M-Score approach has better capabilities for identifying companies involved in fraudulent activities. The results indicate that a high change in asset ratio, changes in director turnover, and the composition of independent board commissioners have a positive and significant influence on the potential for financial statement fraud. However, variables such as the number of available CEO photos and political connections negatively impact financial fraud. Meanwhile, factors like changes in public accounting firms and company age (existence) do not have a significant impact on financial statement fraud and have a negative influence on the likelihood of fraud occurrence
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