Hexagon Fraud Analysis in Detecting Fraudulent Financial Reporting

  • Authors

    • Robih Salam Rahmatullah Bina Nusantara University, Indonesia
    • Toto Rusmanto Bina Nusantara University, Indonesia
    https://doi.org/10.14419/44e4sx96

    Received date: November 18, 2025

    Accepted date: December 26, 2025

    Published date: February 17, 2026

  • Fraudulent Financial Reporting; Pressure; Opportunity; Rationalization; Capability; Arrogance; Collusion

  • Abstract

    This study aims to analyze the influence of factors derived from the fraud hexagon theory pressure (financial stability, external pressure, ‎financial targets), opportunity (audit committee, ineffective monitoring), rationalization (change of auditors), capability (change of directors), ‎arrogance (CEO education, CEO duality), and collusion (related party transactions) on the likelihood of fraudulent financial reporting (FFR). ‎Adopting a quantitative approach, this research utilizes numerical data and statistical analysis to test the proposed hypotheses, examining the ‎relationships between these variables. The results of the logistic regression analysis reveal that several factors have a significant positive ‎impact on the probability of FFR. Specifically, financial stability, financial targets, change of auditors, change of directors, and related party ‎transactions were found to significantly increase the likelihood of fraudulent reporting. Conversely, external pressure, the presence of an ‎audit committee, ineffective monitoring, CEO education, and CEO duality did not demonstrate a statistically significant influence on FFR in ‎this study. The implications for companies are substantial. These findings underscore the critical need for robust corporate governance and ‎vigilant board oversight. Companies should carefully monitor high-pressure environments driven by aggressive financial targets and scrutinize significant organizational changes, such as the turnover of directors or auditors, as these events may serve as red flags for potential ‎fraud. Furthermore, establishing stricter controls and ensuring greater transparency in related party transactions are essential strategies to ‎mitigate the risk of fraudulent financial reporting‎.

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  • How to Cite

    Rahmatullah, R. S., & Rusmanto, T. . (2026). Hexagon Fraud Analysis in Detecting Fraudulent Financial Reporting. International Journal of Accounting and Economics Studies, 13(2), 220-227. https://doi.org/10.14419/44e4sx96