Advanced Research in Economics and Business Strategy Journal
Volume 7, Numéro 1, Pages 305-317
2026-06-30

Do Fraud Pentagon Factors Explain Financial Statement Fraud? Evidence From Indonesian Manufacturing Firms



Authors : Pajur Maria Leontina Karina . Fidiana Fidiana . Efendi David .

Abstract

This study aims to analyze the influence of factors in the fraud pentagon theory—namely, financial targets, financial stability, external pressure, ineffective monitoring, change in auditor, change in directoe, and frequent number of CEO picture, on financial statement fraud in manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2020–2023 period. This study employs a quantitative method using secondary data in the form of companies’ annual financial statements obtained from the Indonesia Stock Exchange (IDX). Sampling was conducted using purposive sampling, while data analysis utilized logistic regression with the assistance of SPSS version 26 software. The results indicate that financial targets have a positive effect on financial statement fraud, whereas financial stability has a negative effect on financial statement fraud. Meanwhile, external pressure, ineffective monitoring, change in auditor, change in director, and frequent number of CEO picture do not affect financial statement fraud. These findings underscore the importance of setting realistic financial targets, maintaining corporate financial stability, and upholding integrity, honesty, and transparency in corporate management to minimize the occurrence of financial statement fraud

Keywords

Fraud ; Financial Target ; Financial Stability ; Change in Director ; Frequent Number of CEO Picture

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