Unfolding the Diamond of Fraud: What Drives Financial Statement Manipulation in Indonesia?

Authors

  • Nabila Nuralfia Zahrani Syarifullah Faculty of Business, Institut Bisnis dan Informatika Kesatuan, Jalan Ranggagading No. 1 Bogor Author
  • Sudradjat Faculty of Business, Institut Bisnis dan Informatika Kesatuan, Jalan Ranggagading No. 1 Bogor Author
  • Amrulloh Faculty of Business, Institut Bisnis dan Informatika Kesatuan, Jalan Ranggagading No. 1 Bogor Author
  • Nilda Tartilla Faculty of Business, Institut Bisnis dan Informatika Kesatuan, Jalan Ranggagading No. 1 Bogor Author

Keywords:

fraud diamond theory, financial target, nature of industry, auditor switching, director’s financial expertise

Abstract

This study investigates the influenfe of Financial Target, Nature of Industry, Auditor Switching, and Director’s Financial Expertise on Fraudulent Financial Statements, with Financial Distress as a moderating variable, based on the Fraud Diamond Theory. The sample consists of 10 pharmaceutical companies listed on the Indonesia Stock Exchange (IDX) during the 2020–2024 period, selected using purposive sampling. The analysis employs multiple linear regression and Moderating Regression Analysis (MRA). The results show that Financial Target and Nature of Industry have a positive effect on fraudulent financial statements, while Director’s Financial Expertise has a negative effect. Financial Distress moderates the relationship between Financial Target and fraudulent financial statements but does not moderate the other independent variables.

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Published

2026-03-20

Issue

Vol. 4 No. 2 (2026): Proceedings of the 4th International Conference on Education, Economics, Business, Entrepreneurship, and Finance (ICEBEF 2026)

Section

Articles