Financial pressure and related party transactions on financial statement fraud: fraud triangle perspective

This study aims to analyse the effect of financial pressure (financial stability, personal financial need and financial targets) and related party transactions (RPTs) on financial statement fraud. Respondents of the study are manufacturing companies listed on the Indonesia Stock Exchange for the yea...

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Published in:International Journal of Business and Emerging Markets
Main Author: Hudayati A.; Nisa T.K.; Sanusi Z.M.
Format: Article
Language:English
Published: Inderscience Publishers 2022
Online Access:https://www.scopus.com/inward/record.uri?eid=2-s2.0-85128778138&doi=10.1504%2fIJBEM.2022.121903&partnerID=40&md5=e20f405ed58138069fd187018d952706
id 2-s2.0-85128778138
spelling 2-s2.0-85128778138
Hudayati A.; Nisa T.K.; Sanusi Z.M.
Financial pressure and related party transactions on financial statement fraud: fraud triangle perspective
2022
International Journal of Business and Emerging Markets
14
2
10.1504/IJBEM.2022.121903
https://www.scopus.com/inward/record.uri?eid=2-s2.0-85128778138&doi=10.1504%2fIJBEM.2022.121903&partnerID=40&md5=e20f405ed58138069fd187018d952706
This study aims to analyse the effect of financial pressure (financial stability, personal financial need and financial targets) and related party transactions (RPTs) on financial statement fraud. Respondents of the study are manufacturing companies listed on the Indonesia Stock Exchange for the years 2011 to 2015. By using fixed effect panel regressions, the survey results show that financial stability as measured by sales divided by total asset and RPTs negatively affect financial statement fraud. In addition, financial targets have a significant positive effect on financial statement fraud. However, this study shows that personal financial need does not affect the financial statement fraud. This study provides several important conclusions. First, companies are in a stable financial condition, enabling them to reduce their financial report fraud. Second, the findings suggest the possibility of a negative impact on the quality of financial statements due to the use of financial performance targets such as ROA. Third, the result of the study which states that RPTs negatively affect fraudulent financial statements implies that in Indonesia with reference to manufacturing companies, RPTs do not reflect negative behaviour or even vice versa. © 2022 Inderscience Enterprises Ltd.
Inderscience Publishers
17536219
English
Article

author Hudayati A.; Nisa T.K.; Sanusi Z.M.
spellingShingle Hudayati A.; Nisa T.K.; Sanusi Z.M.
Financial pressure and related party transactions on financial statement fraud: fraud triangle perspective
author_facet Hudayati A.; Nisa T.K.; Sanusi Z.M.
author_sort Hudayati A.; Nisa T.K.; Sanusi Z.M.
title Financial pressure and related party transactions on financial statement fraud: fraud triangle perspective
title_short Financial pressure and related party transactions on financial statement fraud: fraud triangle perspective
title_full Financial pressure and related party transactions on financial statement fraud: fraud triangle perspective
title_fullStr Financial pressure and related party transactions on financial statement fraud: fraud triangle perspective
title_full_unstemmed Financial pressure and related party transactions on financial statement fraud: fraud triangle perspective
title_sort Financial pressure and related party transactions on financial statement fraud: fraud triangle perspective
publishDate 2022
container_title International Journal of Business and Emerging Markets
container_volume 14
container_issue 2
doi_str_mv 10.1504/IJBEM.2022.121903
url https://www.scopus.com/inward/record.uri?eid=2-s2.0-85128778138&doi=10.1504%2fIJBEM.2022.121903&partnerID=40&md5=e20f405ed58138069fd187018d952706
description This study aims to analyse the effect of financial pressure (financial stability, personal financial need and financial targets) and related party transactions (RPTs) on financial statement fraud. Respondents of the study are manufacturing companies listed on the Indonesia Stock Exchange for the years 2011 to 2015. By using fixed effect panel regressions, the survey results show that financial stability as measured by sales divided by total asset and RPTs negatively affect financial statement fraud. In addition, financial targets have a significant positive effect on financial statement fraud. However, this study shows that personal financial need does not affect the financial statement fraud. This study provides several important conclusions. First, companies are in a stable financial condition, enabling them to reduce their financial report fraud. Second, the findings suggest the possibility of a negative impact on the quality of financial statements due to the use of financial performance targets such as ROA. Third, the result of the study which states that RPTs negatively affect fraudulent financial statements implies that in Indonesia with reference to manufacturing companies, RPTs do not reflect negative behaviour or even vice versa. © 2022 Inderscience Enterprises Ltd.
publisher Inderscience Publishers
issn 17536219
language English
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