Economic and Non-Economic Variables Affecting Fraud in European Countries

Ahmad, Bashir; Ciupac-Ulici, Maria; Beju, Daniela-Georgeta

doi:10.3390/risks9060119

Cited by 7 publications

(7 citation statements)

References 74 publications

(86 reference statements)

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“…Different factors, some of which are economic and others which are noneconomic (Ahmad et al. , 2021) determine corruption.…”

Section: Literature Reviewmentioning

confidence: 99%

Political stability and corruption nexus: an international perspective on European and Asian countries

Beju,

Ciupac-Ulici,

Bresfelean

2024

JRF

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PurposeThis paper aims to investigate the impact of political stability on corruption by drawing upon a sample encompassing both developed and developing European and Asian countries.Design/methodology/approachThe dataset, sourced from the Refinitiv database, spans from July 2014 to May 2022. Panel data techniques, specifically pooled estimation and dynamic panel data [generalized method of moments (GMM)] are employed. The analysis encompasses both fixed and random effects models to capture country-specific cross-sectional effects. To validate our findings, we perform a robustness test by including in the investigation four control variables, namely poverty, type of governance, economic freedom and inflation. To test heterogeneity, the dataset is further divided into two distinct subsamples based on the countries’ locations.FindingsEmpirical findings substantiate that political stability (viewed as the risk of government destabilization) has a positive and significant impact on corruption in all analyzed samples of European and Asian countries, though some differences are observed in various subsamples. When we take into account the control variables, these analysis results are robust.Research limitations/implicationsThis research provided a panel data analysis with GMM, while other empirical methodologies could also be used, like the difference-in-difference approach. However, our results should be validated by extending the time and the sample to a worldwide sample and using alternative measures of corruption and political stability. Moreover, our focus was on a linear and unidirectional relationship between the considered variables, but it would be interesting to test in our further research a non-linear and bidirectional correlation between them. Furthermore, we have introduced in the robustness test only four economic variables, but to consolidate our findings, we plan to include socioeconomic and demographic variables in future studies.Practical implicationsThese outcomes imply that authorities should be aware of the necessity of implementing anti-corruption policies designed to establish effective agencies and enforcement structures for combating systemic corruption, to improve the political environment and the quality of institutions and to apply coherent economic strategies to accelerate economic growth because higher political stability and sustainable development determine a decrease in levels of corruption.Social implicationsAt the microeconomic level, the survival of organizations may be in danger from new types of corruption and money laundering. Therefore, in order to prevent financial harm, the top businesses worldwide should respond to instances of corruption through strengthened supervisory procedures. This calls for the creation of a mechanism inside the code of conduct where correct reporting of suspected situations of corruption would have a prompt procedure to be notified of. To avoid corruption in operational procedures, national plans and policies should be developed by government officials, executives and legislators on a national level, as well as by senior management and the board of directors on an organizational level. This might lower organizations' extra corruption-related expenses, assure economic growth and improve global welfare.Originality/valueA novel feature of our research resides in its broad examination of a sizable sample of European and Asian countries regarding the nexus between corruption and political stability. The paper also investigates a less explored topic in economic literature, namely the impact of political stability on corruption. Furthermore, the study depicts policy recommendations, outlining effective and reasonable measures aimed at improving the political landscape and combating corruption.

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“…Different factors, some of which are economic and others which are noneconomic (Ahmad et al. , 2021) determine corruption.…”

Section: Literature Reviewmentioning

confidence: 99%

Political stability and corruption nexus: an international perspective on European and Asian countries

Beju,

Ciupac-Ulici,

Bresfelean

2024

JRF

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“…Empirically, Salhi & Boujelbene (2012) have examined the relationship between internal governance mechanisms and risk-taking in the banking industry, and Ahmad et al (2021) found a significant relationship between business operational risk and fraud. Iminza et al (2015) have found a positive but weak relationship between governance and operational risk of fraud.…”

Section: Corporate Governance Operational Risk and Financial Statemen...mentioning

confidence: 99%

“…However, either pressure for higher profits and rising share prices or pressure to expropriate assets (for the benefit of the controlling shareholder and the manager's personal business interests) encourage top managers to engage in or approve of fraudulent activity as a means to fulfill this objective (Chen et al, 2006in Shi et al, 2017. Thus, financial statements that contain elements of fraud have an impact on decreasing the financial information integrity and become an invalid information source to be used as a basis for analysis in decision making by various parties, such as investors, creditors, employees, auditors, and competitors (Ansar, 2011) Determinants of fraud include economic and non-economic aspects (Ahmad et al, 2021). One of the identified variables that can influence fraud is operational risk in the economic literature.…”

Section: Introductionmentioning

confidence: 99%

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Does Bank Governance Reduce Financial Statement Fraud? The Moderating Role of Operational Risk

Saraswati,

Agustina

2022

J. Keuang. dan Perbank.

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The complexity generally triggers the opportunity of fraud in operation experienced, so that it can potentially be a serious threat which has a significant loss impact for the company. This study focuses on the indications of financial statement fraud committed by commercial banks in Indonesia. The purpose of this study is to examine whether the implementation of good corporate governance can reduce fraudulent financial statements activity in banks, using the moderating role of operational risk. The population determined is all commercial banks listed on the IDX for 2016 to 2020. All 25 banks that met the specified criteria were used as research samples. The data analysis technique used the Moderated Regression Analysis (MRA) method analyzed with SPSS Software. The research findings reveal no significant relationship between Bank governance and financial statement fraud directly. However, operational risk is shown to have a moderating role in the relationship between Bank governance and financial statement fraud. In addition, operational risk also has a function as a predictor concerning fraud. Overall findings of this study are exciting because the interaction between corporate governance and operational risk can influence the company's decisions on the possibility of fraudulent financial statement activities. The benefits of this research are expected to provide input for bank management in assessing the level of corporate governance implementation and response plans for financial statement fraud actions that have a significant impact on high operational risk costs. In addition, it can provide information for regulators in supervising and evaluating regulations related to anti-fraud strategies set in commercial banks and for investors to ensure the security of their investments to increase investor confidence in banks. Finally, it suggested that further research reconsider the concept and size of the study and add new concepts to provide more determinant factors that affect fraudulent financial statements in companies.

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“…Each type of fraud has its own specific characteristics and therefore there are a number of factors that trigger fraud (Ahmad et al, 2021;Opreţ et al, 2017;Vondráček & Eibl, 2018). The primary reason for tax fraud is the conflict of interests between the private and public sectors.…”

Section: Introductionmentioning

confidence: 99%

Identification of tax fraud and analysis of their impact

Krügerová¹,

Bučková²

Proceedings of the 16th International Scientific Conference INPROFORUM. DIGITALIZATION.Society and Markets, Business and Publi

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One of the ways in which entrepreneurs try to gain an unjustified advantage within economic relations is by committing tax fraud. Tax fraud is an integral part of today's economy, and as the ways of committing tax fraud evolve, so do the ways of detecting it. Entire chains of domestic and foreign companies are often involved in tax fraud. In this way, more and more pressure is exerted on the authorities that are supposed to serve to uncover these frauds. The aim of the article is to identify tax fraud as such, as well as the ways in which it is committed, and to analyze how these frauds affect business activities. In cross-border transactions, it is always much more difficult to prove that tax fraud has occurred. Authorities investigating tax fraud at the national level are limited by their national jurisdiction, and international cooperation at the bilateral and European level is therefore very essential in this area. We will probably never get rid of tax fraud completely. However, thanks to consistent cooperation, it is possible to significantly reduce their occurrence.

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Economic and Non-Economic Variables Affecting Fraud in European Countries

Cited by 7 publications

References 74 publications

Political stability and corruption nexus: an international perspective on European and Asian countries

Political stability and corruption nexus: an international perspective on European and Asian countries

Does Bank Governance Reduce Financial Statement Fraud? The Moderating Role of Operational Risk

Identification of tax fraud and analysis of their impact

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