Analysis of Fraud Pentagon Theory to Detecting Fraudulent Financial Reporting using F-Score Model in State-Owned Companies Indonesia
Author(s): Tarmizi Achmad, Dian Indriana Hapsari, Imang Dapit Pamungkas
Abstract: This study aims to analyze the effect of the fraud pentagon theory consisting of external pressure, effective monitoring, rationalization, capability, and arrogance on fraudulent financial reporting. This study uses the F-score model to see the potential for fraudulent financial reporting. The data used in this study are secondary data from the company's annual reports. The population of this research is state-owned companies listed on the IDX (Indonesia Stock Exchange) during 2015-2019. The sampling technique used purposive sampling so that the sample obtained is 180 samples. The analysis technique used is logistic regression analysis with S.P.S.S. versions 20.0. The findings show that external pressure and rationalization have a significant effect on fraudulent financial reporting. Meanwhile, effective monitoring, capability, and arrogance have no considerable impact on fraudulent financial reporting. The results of this study indicate the occurrence of fraudulent financial reporting in state-owned companies listed on the IDX if the related state-owned companies experience external pressure and have rationalizations to commit fraud.
Keywords: Fraudulent Financial Reporting, Fraud Pentagon Theory, F-scores Model
DOI: 10.37394/23207.2022.19.13WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 19, 2022, Art. #13