FRAUDULENT FINANCIAL REPORTING: PENGUJIAN TEORI FRAUD PENTAGON PADA SEKTOR PERBANKAN YANG TERDAFTAR DI BURSA EFEK INDONESIA TAHUN 2014-2017

Abstract

This research aims to obtain empirical evidence about the efcetiveness of the
fraud pentagon are External Pressure, ineffective monitoring, change in auditor, change
in director and frequent number of CEO’s picture in detecting fraudulent financial
reporting. The variables of the fraud pentagon that used is a pressure with proxy
External Pressure (LEV), Opportunity with proxy ineffective monitoring (BDOUT),
rationalization with proxy change in auditor (CPA), capability with proxy change in
director (dchange), and arrogance with proxy frequent number of CEO’s
picture(CEOPIC). In this research uses a proxy earnings management with discretionary
accruals as the dependent variable. The population of this research is the banking
companies listed in Indonesia stock exchange in 2014-2017. Total sample of this research
is 35 banking companies with four years observation, resulted in 140 firm-observation.
Data analysis was performed with the classical assumption and hypotesis testing using
multiple linear regression. The result indicates that the External Pressure (LEV),
ineffective monitoring (BDOUT), change in auditor (CPA), change in director
(DCHANGE), and frequent number of CEO’s picture(CEOPIC) influence the fraudulent
financial reporting.

Keywords : Fraudulent financial reporting, fraud Pentagon, external pressure,
ineffective monitoring, change in auditor, change in director, frequent
number of CEO’s picture