Boiling the Frog Slowly: The Immersion of C-Suite Financial Executives into Fraud

2020

JFC

Purpose This study aims to provide theoretical and empirical insights concerning how macro-level characteristics influence micro-psychological characteristics, in perpetrating fraudulent behaviours. This is because many fraud studies have mainly been focussed on the solo psychological aspects of the offender, rather than the social environments. This study also makes clear that fraudulent behaviours are different from delinquencies. Design/methodology/approach This research is focussed on the big bureaucratic scandals, occurring in Indonesia. The authors chose Indonesia because it places one of the corrupt countries in The Association of Southeast Asian Nations countries. To achieve the goals, the authors used the ethnographic approach by conducting an exclusive interview with 30 elite executives from the Government of Indonesia. Findings This study finds a deeper understanding of the root causes of fraud committed by individuals and co-offenders, in which micro-psychological, situational, sociological and criminological aspects are linked together. Originality/value This study contains provocative findings that can stimulate a critical understanding of the psychological aetiology of an individual’s intention to perpetrate partial fraud or to co-offend.

Section: Significance Of Researchmentioning

confidence: 98%

Section: Theoretical Implicationsmentioning

confidence: 99%

When and why (honest) people commit fraudulent behaviours?

2020

JFC

“…Despite the importance of psychological characteristics of an individual in the understanding of some of the root causes of fraud, it is also imperative to explore the connection between the characteristics of the sociological organisation and the employees' decisions to engage in fraudulent behaviours. There are some studies that have shed light on the individualised and structural aspects of fraud (Suh et al, 2018;Lokanan, 2018;Belle and Cantarelli, 2017;Schuchter and Levi, 2015;Soltani, 2014;Morales et al, 2014), but they have not examined the routines of interaction both micro-constructs and social psychological constructs in studying fraudulent behaviours within an organisation. Some scholars noted that we need a theoretical stance as to why (honest) people engage in the circle of fraudulent behaviours, which looks at the interplay between micro-and macro-factors (Lokanan, 2018;Akkeren and Buckby, 2017;Anand et al, 2015).…”

Section: Directions For Future Researchtheoretical Implicationsmentioning

confidence: 99%

Critiques and further directions for fraud studies

2020

JFC

Purpose The purpose of this study is to reconstruct the use of disposition variables as determinants of fraudulent behaviours. It is hoped, it stimulates our critical understanding of psychological aetiology on individual’s intention to perpetrate partial fraud or to co-offend. Design/methodology/approach This study was developed as a reflection of empirical work conducted in Indonesia public sectors. Findings By suggesting the important process of individual’s cognitive reasoning, this study identifies that there is an overlooked process made by prior studies in terms of personality traits as a strong predictive power for individual’s intention to commit fraudulent behaviours or white-collar crimes. This study argues that they should not be independently predictive of fraud behaviours. This study acknowledges that in the prediction of social behaviours, whether fraudulent behaviours or not, there are no absolute answers to or analyses of it. However, it is instructive to consider social cognitive theory in elucidating the psychological pathways associated with fraudulent behaviours. This is because it can bridge an appropriate lens in positioning personalised behaviours as a predictor of perpetrating fraudulent behaviours. Then, this study does not have any serious concerns about how many antecedents influence behaviours of intention to perform wrongdoings. However, the functioning of individual cognitive reasoning should not be ignored. Both theoretical and managerial implications from this study are discussed to suggest alternative theories on causes of fraudulent behaviours. Practical implications This study uses social cognitive theory as a basis of analysis. Through a simple analysis, a different perspective of treating the antecedents of fraud has been proposed, so that it can be used to develop more effective intervention that can deter fraudulent behaviours within an organisation. Originality/value This study theoretically explores psychological mechanisms or pathways related to the functioning of individual’s reasoning. Then, this study proposes the critiques, in which it is intended to stimulate another research on deepening and broadening a theory of fraud. In short, this study importantly also offers recommendations and opportunities for future research and organisations to develop effective prevention that can deter fraudulent behaviours.

“…In analysis of individuals' tendencies to defraud, the extent to which the group members are mutually dependent upon each other to reach a certain goal can also form strongest triggers than sociological and financial ones (Suh et al, 2018), without affecting the presence of opportunity to do fraud. These results are consistent with prior studies carried out by Benson et al (2009), Schuchter and Levi (2015) and Albrecht et al (2004) who claim that opportunities and financial needs are not mandatory factors provoking a person to commit fraud.…”

Section: Theoretical Implicationsmentioning

confidence: 99%

Storytelling of bureaucratic white-collar crimes in Indonesia: is it a matter of reciprocal norm?

2020

JFC

Purpose The purpose of this paper is to contribute to the existing fraud studies and theory (fraud triangle) from bureaucratic crime perspectives. Importantly, this paper answers calls on research, exploring the routines of interaction both micro- and social psychological constructs in studying fraudulent behaviours. These aspects are relatively new, which have a little attention from auditing and fraud literature. Design/methodology/approach Experienced fraud perpetrators were used for this study. A semi-structured interview technique was used, allowing to uncover rich descriptive data on the personal experiences of participants. It allowed them to tell and illustrate why and how they get involved in fraudulent activities. Findings Many explanations, from a wide variety of perspectives, have been advanced to explain why people commit fraud in bureaucracy. Using reciprocity and exchange theory as a basis, it was found strong evidence for expanding fraud triangle theory (Cressey, 1953) as a predictor of individual’s intention to commit white-collar crimes. Evidence of these results provides a new challenge to other accounts of why systemic fraud would or would not occur. In this point, it highlights the concepts of social exchange and the norm of reciprocity serve as a useful beginning for explaining the factors that cause someone to commit occupational fraud. Generally, a number of distinct empirical and theoretical contributions arise from the current study. Originality/value This paper contributes to the enrichment of fraud theory and literature, from psychological perspectives. With regard to the reciprocity between peers within and outside organisation, it offers theoretical frameworks about the reasons for the decisions to commit white-collar crimes. As such, it advances fraud and auditing studies.