Does Covid-19 Encourage Banks to Commit Financial Statement Fraud? A Pentagon Perspective

Falsa Dzaky Arifian, Indira Januarti


The research aims to analyze the effect of liquidity, effective monitoring, external auditor quality, managerial ability, and CEO tenure on fraudulent financial reporting in banking companies. The research was conducted at banking companies listed on the Indonesia Stock Exchange from 2017-2021. This study includes data on the pandemic years, namely 2020 and 2021 to see the impact on changes in banking tendencies to commit financial statement fraud and is explained using the fraud Pentagon theory approach. The observed data in this study were 190. Ordinary least squares were used to examine the relationship between research variables. The regression analysis results show that external auditor quality has a negative effect, managerial ability, and CEO tenure have a positive effect on financial reporting fraud. Meanwhile, liquidity and effective monitoring have no effect on fraudulent financial statements. This research has implications for good audit quality to prevent fraud. Managerial ability and tenure CEOs who commit financial reporting fraud need to be of concern to regulators.

Keywords: Banking, Covid-19, Financial Statement Fraud, Pentagon.

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