The Indonesian Journal of Accounting Research
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Detecting Fraudulent Financial Reporting Using Fraud Score Model and Fraud Pentagon Theory : Empirical Study of Companies Listed in the LQ 45 Index
Full text linkMisstatements and concealment of facts about the value of accounts in the financial statements indicate a fraudulent financial reporting. As a result, financial information is irrelevant and misleading. The purpose of this study was to analyze the fraud pentagon theory in detecting fraudulent financial reporting using the fraud score model of companies listed in the LQ 45 index on the Indonesia Stock Exchange in 2014-2018. The results showed financial stability, external pressure, nature of the industry, effective monitoring, change in auditors, total accruals, change in directors, the proportion of independent commissioners, frequent numbers of CEO's picture and family firms simultaneously affect the fraudulent financial reporting. Partially, financial stability and Family firms have a positive effect, external pressure and total accruals have a negative effect, and the nature of industry, effective monitoring, change in auditors, change in director, the proportion of independent commissioners, and frequent number of CEO's picture have no effect on fraudulent financial reporting. Based on the results of the research, fraud pentagon theory can be used to minimize the occurrence of fraudulent financial reporting that may be done by the company by ensuring the fairness of a financial report and assessing the risk of fraud by taking into account all aspects, especially on asset change ratios, debt ratios, accounts receivable ratios, percentage of independent audit committees change in auditors, changes in directors
Do hubristic managers really matter on performance? Evidence from listed firms in Nigeria
No full textThis study examined whether or not hubristic managers affect the performance of listed firms in Nigeria for the period of 2007-2017. Based on Fixed panel estimator, our study reveals that determinants of hubristic managers such as age, tenure, ownership and political appointment are adversely affecting the performance of listed firms in the country, while business climate, size of the firm and earnings deviation are mixed indicators of listed firms’ performance in Nigeria. We propose that the regulating agencies of government in charge of listed firms should reduce the age bracket of CEOs in the country, percentage of shares owned by CEOs in the country should be reduced. Also, firms should not be allowed to make people with political connections or those who are once or presently in a political office a CEO because of its adverse effect on the performance of listed firm in the country
“Truth Vs. Slack Inducing” Paradox: How Does Compensation Scheme Mitigate Social Pressure on Budgetary Slack?
Full text linkThis research aims to examine the role of the compensation scheme in mitigating the negative impact of social pressure on the creation of budgetary slack. There are not clear phenomenon, how can compensation methods with pressure (penalty) actually be better able to reduce budgetary slack compared to compensation methods without penalty? This research contributes by validating the role of truth inducing and slack inducing compensation scheme in order to mitigate the budgetary slack through the perspective of expectancy theory. Results from experimental study among 56 undergraduate accounting students showed that obedience pressure tends to encourage individuals to create budgetary slack compared to while they experience pressure from the peers (H1). Another finding from this research is the tendency of individuals to create budgetary slack tends to be lower when they accept the slack inducing compensation mechanism than truth inducing (H2). These indicate that slack inducing compensation scheme is better used than truth inducing in mitigating the creation of budgetary slack. Different level of risk faced by the individual, especially in the absence of fines or sanctions if the budget target is not reached, give different impact on individual. Our research provides practical implication when individuals get stressed, compensation schemes are less effective in minimizing the effect of social pressure on the creation of budgetary slack.
Cultural Orientation and Reporting Channels: Experimental Study of Whistleblowing Intentions
Full text linkIndividualism refers to personal interests while collectivism refers to collective interests. Formal and informal reporting channels are accesses to report wrongdoings. This research aims to test the causality effect between cultural orientation and whistleblowing intention. The second objectives is to test the causality effect between reporting channel to whistleblowing intention. The third objectives is to examines the interaction effect between cultural orientation and reporting channel to whistleblowing intention. These research use 2x2 between subjects’ factorial design. The manipulation of this research is cultural orientation (individualism and collectivism) and reporting channels (formal and informal). The subjects in this research are accounting students of two private universities in Central Java and Bali. The variable measured is whistleblowing intention. The results of the main effects test show that the cultural orientation has an effect on the intention to complain about fraud. The testing of other main effects shows that the reporting channel has an effect on the whistleblowing intention. Testing the interaction effect shows that cultural orientation influences the intentions of whistleblowing intention depending on the reporting channels provided
The Effect of Debt Policies, Profitability, Managerial Ownership Structure, and Liquidity on Dividend Policy
No full textThis study aims to determine the effect of debt policy, profitability, managerial ownership and liquidity on dividend policy on manufacturing companies listed on the Indonesia Stock Exchange in 2014-2018. The sample in this study was manufacturing companies listed on the Indonesia Stock Exchange in 2014-2018. The sampling technique used in this study was purposive sampling, which is the process of taking samples based on certain predetermined criteria. The number of samples in this study amounted to 60 observations. The data analysis technique used is multiple linear regression analysis techniques. The results of this study indicate that 1). Debt policy does not affect dividend policy; 2). Profitability has a positive effect on dividend policy; 3) Managerial ownership has no effect on dividend policy; and 4) Liquidity has no effect on dividend policy. Keywords: Debt policy, profitability, managerial ownership, liquidity and dividend polic
Information Presentation Pattern, Information Order and Framing Effect in Taking Investment Decisions
Full text linkThe aims of this study are to examines the pattern of information presentation, the order of information and framing effect in investment decision making. the pattern of information presentation and the order of information explained by belief adjustment model developed by Hogarth and Einhorn (1992), beside that framing effect explained by prospect theory, fuzzy trace theory and probabilistic mental model. This study used experiment design 2x2x2 mixed design. Total subjects in this study were 104 students from STIE Perbanas Surabaya consisting of 90 students bachelor degrees of accounting and 14 students bachelor degrees of management. This study uses a pencil based experiment which filling out the questionare that was answered manually by participants.the results show that: (1) there are bias judgement especially recency effect in the presentation of step by step with the framing condition appropriate in information; (2) there are bias judgement when gives the presentation of step by step with the framing condition appropriate and not appropriate in information, and (3) when do mix of the pattern of information presentation with framing condition appropriate in information bias judgement happened. Overall this results show that the belief adjustment model developed by Hogarth and Einhorn (1992), prospect theory, fuzzy trace theory and probabilistic mental model is partially hold in investment decision making
Simultaneous Effect between Financial Reporting Aggressiveness and Tax Reporting Aggressiveness: The Impact on The Earnings Informativeness
Full text linkAbstract: This study aims to analyze the simultaneous effect between Financial Reporting Aggressiveness and Tax Reporting Aggressiveness. Moreover, this study aims to examine the impact of financial reporting aggressiveness (that had been influenced by the level of tax reporting aggressiveness) on the earnings informativeness. In addition, this study also aims to investigate the impact of tax reporting aggressiveness (that had been influenced by the level of financial reporting aggressiveness) on the earnings informativeness. Using TSLS method and sample consists of Indonesian listed manufacture companies for the period 2013 – 2016, this study found that the financial reporting aggressiveness and tax reporting aggressiveness have simultaneous effect. However, this study failed to demonstrates that the simultaneous effect between financial reporting aggressiveness and tax reporting aggressiveness have significant impact on earnings informativeness. There are two contributions expected from this study, first, it provides empirical evidence that financial reporting aggressiveness and tax reporting aggressiveness have simultaneously effect, since this study is the first that investigates this area. Second, this research also the first that focused on analyze the earnings informativeness impact of managers’ activity in financial reporting and tax reporting aggressiveness
Quality Management Practices and Quality Performance: A Thematic Analysis of Indonesia’s Health Service Provider
Full text linkPreceeding literature indicates that service organizations are lagging behind their manufacturing firms in terms of the effective deployment of Total Quality Management (TQM) practices aimed to achieve operational and strategic goals. Given the paucity of TQM researches in service and Non-for-Profit organization, the objective of this study is for our research object to shed some light on the current TQM practices of and their relation to the company’s quality performance. service organizations. A thematic analysis is used to develop the constructs of QM practices. TQM is divided into two themes which are Infrastructure or “Soft” Quality Management (QM) Practices and Core or “Hard” QM Practices. The former one stresses on the human aspects whereas the latter is on the methods and business techniques. Each theme will be further broken down into its subthemes which have correlation with quality performance based on past researches. The paper derives its primary insights from in-depth interviews with the employees of a university’s health service provider in Indonesia. It analyses inductively the employee’s perspectives of QM practices implemented in the organization. This qualitative research confirms causal models suggested by past quantitative studies and depict the organization’s enthusiasm in implementing TQM practices and how those improve organization’s quality performance. This study illustrates considerably small theoretical-practical gap of QM practices that is on the supplier relationship. More importantly, this study underscores the differences in TQM implementation practices due to some industry‐specific factor
Does Financial Literation Moderate The Effect of Funding on The Sustainability of Micro Enterprises
Full text linkFinancing is one of the main supporting factors in the sustainability of micro businesses. Micro businesses are expected to be able to manage company finances professionally for the benefit and sustainability of their business. The purpose of this study is to examine financial literacy skills in moderating the effect of financing on the sustainability of micro businesses. The variables tested were financing, financial literacy and business sustainability.The population in this study is a micro-business that runs its business activities in Blora Regency, Central Java. The number of samples used in this study were 120 micro businesses, which were determined based on the purposive sampling method. The analytical tool used to test the hypothesis is simple regression and multiple regression using SPSS version 25.0. The results showed that financing has a positive effect on the sustainability of micro businesses and financial literacy strengthens the effect of financing on the sustainability of micro businesses.The implication of this study is that micro entrepreneurs are expected to be able to improve financial literacy skills, especially in terms of fund management because funds obtained from financing activities are vulnerable to the possibility of fraud and mismanagement
Reflections on Individual Personal Values in the Budgetary Slack Phenomenon
Full text linkAbstract: Research and theory on the role of personal values in morality have received significant attention in the last years. In this study, we observe the tendency of individuals acting within organizations to create budgetary slack given their personal values and social reality. Specifically, we interview with the four undergraduate students in Accounting. We observe the ethical dilemma of the students as a representative of youth who ever involved in the budget-setting process. Recent studies in empathy-related responses to the individual ethical dilemma are also discussed. We find that all the participants have different responses to slack the budget after being pressured by their social environment. All the participants tend to create a budget slack by adding unexpected costs in their budgets. They use the "relativist" ideology and feel a sense of empathy towards the sustainability of their organization. However, the participants still prioritize their rationality over the social reality concerning the budgetary slack phenomena. The results suggest that personal values and social reality play a role in determining how individuals should react to the moral reasoning of budgetary slack