An Analysis of Fraud Hexagon and its Influence on Fraudulent Financial Reporting of Construction Companies in Indonesia

Syifani Andira; Islahuddin Islahuddin

doi:10.55927/jambak.v4i1.320

Authors

Syifani Andira Universitas Syiah Kuala
Islahuddin Islahuddin Universitas Syiah Kuala

DOI:

https://doi.org/10.55927/jambak.v4i1.320

Keywords:

Fraud Hexagon, Fraudulent Financial Report, Construction Industry, Beneish M-Score, IDX

Abstract

This study aims to analyze the influence of the elements within the Fraud Hexagon theory on fraudulent financial report in construction companies. The Fraud Hexagon is an expansion of previous fraud theories and consists of six key dimensions: pressure, opportunity, rationalization, capability, arrogance, and collusion. This research adopts a quantitative approach using multiple linear regression analysis. The variables used as proxies for the Fraud Hexagon elements include asset growth, monitoring effectiveness, audit opinion, board of director changes, CEO duality, and political connections. Data were obtained from annual reports of IDX-listed construction companies during the period of 2019-2023. The results show that several elements of the Fraud Hexagon have a significant effect on financial statement fraud, particularly within the construction industry, which is characterized by operational complexity and vulnerability to manipulation.

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