Factors Affecting Financial Shenanigans in the Perspective of Fraud Triangle: An Empirical Study Among Manufacturing Companies Listed in Indonesia Stock Exchange

Abstract

This research aimed to obtain an empirical evidence about the effectiveness of fraud triangle in explaining the tendency of financial shenanigans. To achieve these objectives, this research examined the factors that influenced financial shenanigans consisting of 5 independent variables; three variables of pressure elements (Financial Stability, External Pressure, and Financial Target); one variable of opportunity elements (Monitoring Effectiveness); and one variable of rationalization elements (Auditor Change). The population of this research was the companies in manufacturing sector listed in Indonesia Stock Exchange during 2017-2018. Total sample of this research was 78 samples. For hypothesis testing, we used the logistic regression method. The results showed that Financial Stability, External Pressure, and Monitoring Effectiveness has a significant influence toward Financial Shenanigans, while Financial Target and Auditor Change has no effect on the tendency of Financial Shenanigans.

Determinants Of Financial Shenanigans Indications During The Covid-19 Pandemic

“…More enormous changes in the total assets owned by the company have an impact on the high shenanigan's actions in the financial statements, which is consistent with the findings of (Salim et al, 2021), who discovered that when there is a significant increase of ACHANGE in the company, the risk of financial shenanigans increases. Based on these arguments, this study hypothesises that:…”

“…Dependent Variable. Financial shenanigans can generally be detected using the Beneish M-Score (Salim et al, 2021), F-Score (Sakti et al, 2020), Altman Z-Score (Bhavani & Amponsah, 2017) and discretionary accruals (Ines, 2017). This study uses the F-Score as an indicator in detecting financial shenanigans following (Sakti et al, 2020) which states that the F-Score method is superior to other methods in detecting financial shenanigans.…”

“…The third factor, financial stability, becomes one of the potential factors in shenanigans. If the company's economic, industrial, or operating conditions are unstable, then there is financial instability that puts pressure on management to form various strategies in maintaining financial stability conditions (Skousen et al, 2009;Salim et al, 2021) Some gaps in previous research, namely research conducted by (Rengganis et al, 2019), found that the company's financial targets as measured by Return on Assets (ROA) had a positive influence on financial shenanigans because of the high financial targets that triggered management to have incentives to make various efforts to achieve these targets while according to (Umar et al, 2020) high or low financial targets of companies did not cause incentives fraud committed by management.…”

Detecting Indications of Financial Statement Fraud: a Hexagon Fraud Theory Approach

“…Ineffective supervision occurs because the oversight department do not work effectively to monitorthe operational activities. The absence of a supervisory department or the ineffectiveness of the department's performance can lead to financial statement fraud (Nanda et al, 2019;Salim, Siswanto, Wijaya, & Angela, 2021).…”

Perkembangan Akuntansi Thailand dan Analisis Shenanigans pada Perusahaan Group Lease

“…Kurangnya pengungkapan akuntansi yang mencerminkan kondisi perusahaan sebenarnya. Manajemen tidak menyajikan informasi yang sesungguhnya dihadapi perusahaan kepada para pemangku kepentingan seperti adanya kesulitan dalam keuangan, adanya ketidakpastian hutang kontigensi (Salim et al, 2021). Manajemen menggunakan trik akuntansi yang dinilai memiliki kemungkinan kecil tertangkap misalnya memainkan laba penghasilan dalam pajak (Schilit, 2010).…”