Financial Stability, Leverage, Ineffective Monitoring, Independent Audit Committee, and the Fraudulent Financial Statement

Abstract

This study aims to develop prior empirical model research of factors influence toward fraudulent financial statement and determine some element of fraud triangle that are financial stability, Leverage , ineffective monitoring and one element of Good Corporate Governance that is independent audit committee influence to fraudulent financial statement. This research topic is important because investors need earnings information as a basic for making investment decision and fraudulent financial statement may affect quality of earnings information received by investors. Data obtained from financial statement of mining company period 2011-2015, data were analyzed with multiple linier regressions with 150 samples collected by purposive sampling technique. Then the authors used Micro soft Excel and SPSS version 24 for processing and analyzing samples. The results showed only financial stability that has a significant influence on fraudulent financial statement, while Leverage, ineffective monitoring and independent audit committee partially has not significant influence toward fraudulent financial statement.

Financial Stability, Monitoring, and Replacement Directors on Fraudulent Financial Reporting

“…This research is validated by (Fitriana et al, 2021;Quraini & Rimawati, 2019;Sasongko & Wijayantika, 2019). In contrast, the result of this study contradicts those of (Ozcelik, 2020;Septriyani & Handayani, 2018;Tjen et al, 2020).…”

“…Financial stability or profitability are jeopardized due to adverse economic, industry, or operating conditions affecting the entity, such as increased competition or saturation of the market and accompanied by shrinking margins, there is a strong tendency toward rapid change, whether technological advancements, obsolescence of a product, or interest rates, demand from consumers is declining significantly, and failures of businesses are increasing within the industry and across the economy, business failures result in threats of hostile bankruptcy, foreclosure, or takeover, excessive growth or profitability, particularly in comparison to similar businesses, and new accounting standards, legislation, or regulations describe factors affecting a business's financial stability (Messier Jr. et al, 2017). A correlation between financial stability and fraudulent financial reporting was found by (Ozcelik, 2020;Septriyani & Handayani, 2018;Tjen et al, 2020) obtaining the results that financial stability has a positive effect on fraudulent financial reporting.…”

Pengaruh Ineffective Monitoring, Financial Stability, Dan Corporate Governance, Terhadap Financial Statement Fraud

“…Dewan komisaris berperan sangat penting khususnya dalam pengawasan terhadap manajemen puncak. Dengan dimilikinya komisaris yang independen, tidak memiliki hubungan dengan pihak internal perusahaan, maka pengawasan perusahaan akan lebih efisien (Tjen et al, 2020).…”