Determinants of Financial Statement Fraud: An Empirical Analysis Based on the Fraud Star Theory in Indonesia

Yuha Nadhirah Qintharah; Rosmawati Rosmawati; Rakhmundia Aryo

doi:10.17977/jabe.v10i3.63876

Determinants of Financial Statement Fraud: An Empirical Analysis Based on the Fraud Star Theory in Indonesia

Yuha Nadhirah Qintharah, Rosmawati Rosmawati, Rakhmundia Aryo

Abstract

This study aims to analyse the determinants of financial statement fraud through the lens of the Fraud Star Theory. The research focuses on companies within the Consumer Non-Cyclicals sector listed on the Indonesia Stock Exchange (IDX). The final sample comprises 71 companies within the Consumer Non-Cyclicals sector, resulting in 213 firm-year observations spanning the 2021–2023 period. Hypothesis testing was conducted using panel data regression analysis via EViews 12 to examine the relationship between the Fraud Star elements and fraudulent financial reporting. The empirical results demonstrate that financial stability has a significant positive effect on financial statement fraud. Conversely, changes in auditors, changes in directors, and corporate integrity exhibit a significant negative effect, suggesting these factors may serve as deterrents to fraudulent activity. Interestingly, financial targets and ineffective monitoring were found to have no significant influence on the occurrence of fraud within this sector. Future research should explore alternative fraud models and extend the analysis to other categories of occupational fraud, such as asset misappropriation and corruption.

Keywords

fraud; fraud star; financial statement fraud;

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DOI: http://dx.doi.org/10.17977/jabe.v10i3.63876