Covid-19 Pandemic Situations’ Impact on the Relationship Between False Financial Statements and Real Earnings Management: A View from the Fraud Hexagon Theory

DOI

10.2991/978-2-38476-118-0_38How to use a DOI?

Keywords

False Financial Statements; Real Earnings Management; Fraud Hexagon Theory

Abstract

Due to the Covid 19 pandemic crisis, many businesses have seen their economic activity diminish, which motivates them to implement actual profits management. Companies may have the possibility to fabricate financial statements to enhance the appearance of their financial reports as a result of this circumstance. This study seeks to ascertain and analyze the impact of the COVID-19 pandemic situations on the relationship between fraudulent financial statements from the perspective of the fraud hexagon theory, which includes stimulus/pressure, capability, opportunity, rationalization, arrogance, and collusion on real earnings management. This research uses quantitative techniques and includes hypothesis testing. The secondary data utilized was obtained from the annual reports of consumer cyclical firms that were listed on the Indonesia Stock Exchange (IDX) before (2019) and during the Covid-19 epidemic (2020). Utilizing the purposive sampling approach, data were gathered. According to the study’s findings, actual profits management was positively impacted by financial stability and opportunity, but not by capacity, rationalization, hubris, or collusion. It was discovered that the pandemic scenarios did not exacerbate the impact of false financial statements on the management of profitability. As a result, the firm works to keep its cash flow in good shape so that its finances are solid and its operations are not difficult. The business might make an attempt by appointing an impartial commissioner who has the designation of accountant or CPA and has the capacity to spot financial statement fraud.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Vinola Herawaty
AU  - Armetha Rizqia Sari
PY  - 2023
DA  - 2023/10/10
TI  - Covid-19 Pandemic Situations’ Impact on the Relationship Between False Financial Statements and Real Earnings Management: A View from the Fraud Hexagon Theory
BT  - Proceedings of the 4th Borobudur International Symposium on Humanities and Social Science 2022 (BIS-HSS 2022)
PB  - Atlantis Press
SP  - 332
EP  - 342
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-118-0_38
DO  - 10.2991/978-2-38476-118-0_38
ID  - Herawaty2023
ER  -