Fraudulanet Financial Reporting Using Fraud Pentagon Model: Evidence form the State-Owned Companies in Indonesia

Vol 8 No 12 (2025): Volume 08 Issue 12 December 2025

Article Date Published : 31 December 2025 | Page No.: 6689-6700 | Google Scholar | Crossref doi for this article

Abstract :

Financial statement fraud has the highest number of losses among all fraud types. In addition to harming finances of a company, false financial reports could risk the viability of the business. In the corporate sector, fraud results in losses of trillions of rupiah. This study uses the fraud pentagon theory to investigate the relationship between fraudulent financial reporting and pressure, opportunity, rationalization, competence, and arrogance. This study applied quantitative method and causally associative approach. This research using secondary data from financial reports that were obtained through the Indonesia Stock Exchanges (IDX) official website. The state-owned companies (BUMN) listed on IDX 2018-2023 period comprise the study population, and purposive sampling method used to determine sample size. One hundred eighty samples from thirty BUMN as result of the sample selection. The study method of data analysis is the Random Effect Model (REM) with EViews 13. The result of this research indicate that return on assets (ROA), and change in auditor (AUDCHANGE) has significant positive effect on fraudulent financial reporting (FFR). In contrast, ineffective monitoring (BDOUT), change in director (DCHANGE), and number of CEO picture (FCEO) did not significant effect on FFR in state-owned companies. This research can contribute to the advancement of current theories and offer companies resources to lower the risk of fraud. This research advances audit company best practices for enhancing companies auditing efficacy in lowering financial reporting fraud.

Keywords :

Change in auditors, Change in directors, Financial Target, Ineffective monitoring, Number of CEO pictures

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How to Cite :

Fraudulanet Financial Reporting Using Fraud Pentagon Model: Evidence form the State-Owned Companies in Indonesia. Rachmat Agus Santoso, Meutia, Yeni Januarsih, Wulan Retnowati, 8(12), 6689-6700. Retrieved from https://ijcsrr.org/single-view/?id=24978&pid=24607

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