ANALYSIS OF THE EFFECT OF PENTAGON FRAUD ON FINANCIAL STATEMENT FRAUD (Empirical Study on Health Sector Companies Listed on the Indonesia Stock Exchange for the 2018-2021

Abstract

The company's financial statements as a means of communication between the company's internal and external parties must be prepared relevantly, competently and completely to be utilized optimally by users of financial statements. Business competition is increasingly fierce every company, encouraging management to manipulate financial statements to get a good assessment from various parties. This study is a quantitative study that aims to examine the effect of pentagon fraud proxied with eight indicators from five variables consisting of pressure variables (financial instability, external pressure), opportunity variables (ineffective supervision, industrial nature), rationalization variables (external auditor turnover), competency variables (change of directors), and arrogance variables (CEO duality ). This study uses secondary data with purposive sampling techniques, there are 23 health sector companies listed on the Indonesia Stock Exchange in 2018-2021. The results of this study prove that financial instability has a significant positive effect on financial statements, external pressure and industry nature have a significant negative effect on financial statements, ineffective supervision, change of external auditors, change of directors and CEO duality does not affect financial statement fraud.