Fraud Hexagon And Fraudulent Financial Reporting: The Role Of Power Distance

Abstract

The purpose of this study is to examine the elements of the fraud hexagon that affect fraudulent financial reporting and also examine the influence of the power distance culture interaction on the relationship between the elements of the fraud hexagon on fraudulent financial reporting. This study uses financial statement data for 2018-2021 collected from the company's official website and cultural indexes collected from Hofstede's official website. The research population is State-Owned Enterprises (SOEs) in Indonesia, the United States, Australia, Germany and South Africa. The sample selection was based on purposive sampling method and the data was tested using logistic regression analysis on 70 companies. The results showed that only the variables of opportunity and collusion had an effect on financial statement fraud. The results also show that power distance is able to moderate the relationship of opportunity and arrogance to financial statement fraud. These results can explain the phenomenon that fraud is a complex and multidimensional problem.