The Roles of Fraud Hexagon, Intellectual Capital, and Information Technology in Fraudulent Financial

Febryanti Simon; Patricia Diana

doi:10.32535/ijafap.v9i3.4565

The Roles of Fraud Hexagon, Intellectual Capital, and Information Technology in Fraudulent Financial

Febryanti Simon, Patricia Diana

Abstract

Fraudulent financial reporting (FFR) remains a significant concern because it undermines the reliability of financial information and may adversely affect stakeholders’ decision-making. Although previous studies have extensively examined FFR using the fraud hexagon framework, limited evidence integrates fraud-related factors with intellectual capital and information technology (IT), particularly in the context of Indonesian listed manufacturing companies. This study examines the effects of fraud hexagon dimensions, intellectual capital, and IT on FFR. Using a quantitative approach, the study analyzes 447 firm-year observations from manufacturing companies listed on the Indonesia Stock Exchange (IDX) during 2020–2022. FFR is measured using the Beneish M-Score, and the hypotheses are tested using panel data regression. The results show that financial stability (b = 4.025, p < 0.01), external pressure (b = 18.440, p < 0.01), and financial targets (b = 24.302, p < 0.05) have significant positive effects on FFR, while the remaining variables show no significant effects. The model explains 69.5% of the variation in FFR. These findings highlight pressure-related factors as important indicators of potential FFR and suggest that firms should strengthen monitoring mechanisms and fraud-prevention controls, particularly when experiencing financial pressure.

Keywords

Fraudulent Financial Reporting; Fraud Hexagon; Indonesia Stock Exchange; Intellectual Capital; Information Technology

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References

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DOI: https://doi.org/10.32535/ijafap.v9i3.4565