Fraud Diamond and Management Fraudulent Act Analysis: Evidence from Indonesia

Abstract

This study examines the effect of pressure, opportunity, rationalization, and capability to management fraudulent act of the listed firms. The firms which listed on Indonesian Stock Exchange (IDX) from 2008-2016 are classified as fraudulent and non-fraudulent firm. The fraudulent firms are selected from the listed firms which have been suspended due to fraudulent act or law violation. The study use purposive sampling, as a result, 58 samples which consist of 29 fraudulent firms, and 29 non-fraudulent firms used as samples. The results show that management fraudulent act of the listed firms only affected by pressure and opportunity. Rationalization is not affecting management fraudulent act, because different social process make different justification regarding to fraudulent act. Capability is not affecting management fraudulent act, because CEO power cannot be forced against the social norm which is accepted with the society. This study also shows that fraudulent firms which have founder on board of commissioner and director do not have different characteristic regarding pressure, opportunity, and capability.