Fraud Risk in Soes: Audit Quality and Board Gender Diversity
DOI:
https://doi.org/10.51278/bce.v6i2.2793Keywords:
Fraud Hexagon, ; Soe’s; Fraudulent Financial Reporting, Audit QualityAbstract
Financial reporting fraud in State-Owned Enterprises (SOEs) has become a serious concern due to its detrimental impact on public trust and economic stability. This study aims to examine and analyze the influence of fraud hexagon theory elements on financial reporting fraud in Indonesian SOEs during the 2019–2024 period, while positioning audit quality and board gender diversity as moderating variables. Utilizing the Fixed Effect Model (FEM) on 162 data points from 27 companies, with fraud measured by the Beneish M-Score, the results indicate that none of the fraud hexagon elements pressure, opportunity, rationalization, capability, arrogance, and collusion exert a significant effect on financial reporting fraud. Furthermore, the moderation tests failed to demonstrate any interaction effects on these relationships, which is likely due to the limited variation in both audit quality and board gender diversity within the SOE sector. These findings confirm that multi-layered oversight by the BPK, OJK, and relevant ministries has successfully restricted the opportunities for fraudulent financial reporting in Indonesian SOEs. By shifting the focus from individual behavioral traits to structural monitoring, this study challenges the universal applicability of the fraud hexagon theory, demonstrating that robust institutional oversight can effectively neutralize micro level fraud drivers a pivotal insight for reshaping corporate governance and anti fraud frameworks in state controlled economies globally.
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