The Effect Of Pentagon’s Fraud On Financial Statement Fraud
Keywords:
Fraudulent Financial StatementAbstract
Research on financial statement fraud is interesting to study because thera cases of accounting scandals that occur in publicly listed companies in Indonesia. This study aims to empirically examine the effect of the fraud pentagon in detecting fraudulent financial statements. The pentagon’s fraud theory is a development of the fraud triangle theory by adding elements of competence and arrogance. Fraud pentagon is proxied by seven variables consisting of three variables from the pressure element (financial stability, financial target and external pressure); one variable from the opportunity element (nature of industry); one variable from the rationalization element (total accrual); one variable from the competence element (change in director) and one variable from the element of arrogance (frequent number of CEO’s picture). F-Score model is used determine fraudulent financial statement. This research was conducted on companies listed in the LQ45 Index in the 2018-2022 period. By using multiple regression analysis, the results show that external pressure, nature of industry and total accrual have an effect on fraudulent financial statement.
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