The Effect of Fraud Diamond on Fraudulence on Financial Reporting

Abstract

The purpose of this study is to investigate the effect of fraud diamond on financial statement fraud. The fraud diamond theory consists of four factors that influence the occurrence of fraud, namely pressure, opportunity, rationalization, and ability. This study uses agency theory and fraud diamond theory to explain the relationship between variables. The population in this study includes manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2020-2022 period. The sample selection was carried out using purposive sampling method, which resulted in 219 samples. Data were analyzed using multiple linear regression, and hypothesis testing was carried out through a partial test (t test).

The results of this study indicate that three factors of the fraud diamond, namely pressure, rationalization, and ability, have a positive and significant influence on financial statement fraud. This study shows that an increase in each of these factors significantly increases financial statement fraud in manufacturing companies in Indonesia during the period 2020-2022.