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Budget participation and financial information asymmetry: Behavior of budget users and financial report fraud

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Listed:
  • Seri Suriani
  • Indrayani Nur
  • Sukmawati Mardjuni
  • Sitti Mujahida Baharuddin
  • Abdul Karim

Abstract

Financial statement fraud is a problem often faced by organizations that can reduce their performance. An organization that successfully achieves its goals must be aware of information asymmetry and the need for moral justice in managing its finances. The research population comprises employees of the finance, planning, reporting, and budget preparation sections of the Gowa Regency regional performance unit. This research selected a saturated sample of 76 employees from the total population. The results show that participatory budgeting has a significant effect on financial report fraud and that information asymmetry has a substantial influence on financial statement fraud. The research results show that moral justice moderates the effect of participatory budgeting on financial report fraud. Moral justice cannot moderate the influence of information asymmetry on financial statement fraud. Employees must still have good moral justice in participatory budgeting to minimize the possibility of fraudulent financial reports. It is hoped that the findings of this research will enable organizations to create innovative information facilities to reduce information asymmetry so that organizational performance can be achieved.

Suggested Citation

  • Seri Suriani & Indrayani Nur & Sukmawati Mardjuni & Sitti Mujahida Baharuddin & Abdul Karim, 2024. "Budget participation and financial information asymmetry: Behavior of budget users and financial report fraud," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 14(10), pages 748-761.
  • Handle: RePEc:asi:aeafrj:v:14:y:2024:i:10:p:748-761:id:5201
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