Analysis of Fraud Pentagon and Good Corporate Governance in Indonesian Financial Companies
DOI:
https://doi.org/10.53840/jmm.v13i2.155Keywords:
Fraud, Fraud Pentagon, Good Corporate GovernanceAbstract
This research will explore the practice of fraud on financial statement and the factors that affect according to Fraud Pentagon Theory using Good Corporate Governance (GCG) as a moderating variable. The research method uses in this study is associative which to examine the relationship to financial statement fraud and the elements that affect fraud are opportunities, pressure, rationalization, competence, and arrogance. Data in the form of secondary datatype obtained from IDX Statistics. Companies specialized in financial sector in which listed on the Indonesia Stock Exchange in 2021 will be used as the study population. The sampling method uses purposive and a sample of 92 companies. The result exhibits the variables of financial stability, external pressure, competence, and arrogance are having a significant effect upon the fraudulent financial reporting. Financial targets, opportunities, and rationalization have a non-significant effect upon the fraudulent financial statement. Good corporate governance does not moderate the relationship between financial targets, opportunities, rationalization, competence, arrogance, and fraudulent financial reporting variables. Good corporate governance moderates the relationship between financial stability, external pressure, and fraudulent financial reporting variables. The outcome from this research can be a recommendation for companies to reduce fraud through implementation strategies and improve the implementation of good corporate governance so that companies can create value and continue to improve their performance.
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