The Effectiveness of Pentagon Fraud in Detecting Fraudulent Financial Reporting: Using the Beneish Model in Manufacturing Companies on the Indonesia Stock Exchange

Abstract

This study aims to analyze the effect of pressure, opportunity, rationalization, capability, arrogance on fraudulent financial reporting. The population in this study are manufacturing companies listed on the Indonesia Stock Exchange. The results showed that financial stability pressures, industrial conditions had a positive and significant effect on fraudulent financial reporting, while the change of directors had a significant negative effect on fraudulent financial reporting. Financial stability pressures will tend to create fraudulent financial reporting and the capability to change directors can prevent fraudulent financial reporting. Financial target pressures, external pressures, institutional ownership, effectiveness of supervision, industrial conditions, changes in auditors, total accruals and arrogance do not have a significant effect on fraudulent financial reporting.

The effect of real earnings management, fraud, and earnings informativeness, as the moderating variable, on investment efficiency

“…Fraud is known as the action taken by a company that causes misstatements in the financial statements to obtain a higher profit. Elaboration of the studies of the fraud determinants has been carried out from year to year (Utomo, 2018;Farmashinta & The effect of real earnings management, fraud, and earnings informativeness … Journal of Accounting andInvestment, 2023 | 540 Yudowati, 2019;Septriani & Desi Handayani, 2018;Yesiariani & Rahayu, 2017;Nugroho et al, 2021). Based on several studies, it is concluded that two factors that always affect fraud are external pressure and financial stability (Firmansyah et al, 2022).…”