DETERMINANTS OF FRAUDULENT FINANCIAL STATEMENTS IN INDONESIAN INSURANCE COMPANIES: A FRAUD HEPTAGON APPROACH

Jesika Kristina Butarbutar; Richatul  Jannah

doi:10.26533/eksis.v20i2.1599

Jesika Kristina Butarbutar Semarang State University
Richatul Jannah Semarang State University

DOI: https://doi.org/10.26533/eksis.v20i2.1599

Keywords: Heptagon Fraud

Abstract

This research aims to analyze the determinants of Fraudulent Financial Statement (FFS) indications based on the Fraud Heptagon perspective in insurance companies listed on the Indonesia Stock Exchange for the period 2020-2024. The research sample includes 12 companies selected through purposive sampling, producing 60 secondary data observations from annual financial reports obtained from the official BEI website and the companies' respective websites. The dependent variable FFS is measured using the Beneish M-Score model. The independent variables consist of seven proxies: Pressure (leverage ratio/LEV), Opportunity (proportion of independent board of commissioners/BDOUT), Rationalization (Total Accrual to Total Assets/TATA), Capability (Change in Directors/DCHANGE), Arrogance (CEO Pictures/CEOPIC), Ignorance (Corporate Governance Courses/INEDU), and Greed (Executive Director Remuneration/EXREMU). Data analysis was performed using logistic logit regression with EViews v12. The results show that partially, only the rationalization variable (TATA) significantly influences Fraudulent Financial Statement indications, while the other variables are not significant. Simultaneously, all independent variables collectively can explain the probability of Fraudulent Financial Statement occurrence.

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