IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v16y2023i7p318-d1185159.html
   My bibliography  Save this article

Corporate Governance and Financial Statement Fraud during the COVID-19: Study of Companies under Special Monitoring in Indonesia

Author

Listed:
  • Enggar Diah Puspa Arum

    (Accounting Department, Faculty of Economics and Business, Universitas Jambi, Jambi 36361, Indonesia)

  • Rico Wijaya

    (Accounting Department, Faculty of Economics and Business, Universitas Jambi, Jambi 36361, Indonesia)

  • Ilham Wahyudi

    (Accounting Department, Faculty of Economics and Business, Universitas Jambi, Jambi 36361, Indonesia)

  • Aulia Beatrice Brilliant

    (Accounting Department, Faculty of Economics and Business, Universitas Jambi, Jambi 36361, Indonesia)

Abstract

The COVID-19 pandemic had a wide-ranging impact, resulting in a global recession due to weakened purchasing power. This circumstance necessitates business organizations adapting to developments and being more conscious of the risk of financial statement fraud. The intention of this research is to investigate the way corporate governance affected financial statement fraud during the COVID-19 pandemic. To acquire empirical data for examining corporate governance variables on financial statement fraud, the research was examined using quantitative methods. The study takes advantage of secondary data acquired from annual reports of companies under special monitoring listed on the Indonesia Stock Exchange of 2020–2021. The logistic regression method was used to evaluate 134 data sets, and financial statement fraud was measured using the Z-Score and F-Score models. The results indicate that when using the Z-score, only the board size has a negative effect on financial statement fraud during the COVID-19 pandemic. Meanwhile, using the F-Score, the corporate governance variables studied are not proven to have an influence on financial statement fraud during the COVID-19 pandemic.

Suggested Citation

  • Enggar Diah Puspa Arum & Rico Wijaya & Ilham Wahyudi & Aulia Beatrice Brilliant, 2023. "Corporate Governance and Financial Statement Fraud during the COVID-19: Study of Companies under Special Monitoring in Indonesia," JRFM, MDPI, vol. 16(7), pages 1-15, July.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:7:p:318-:d:1185159
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/16/7/318/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/16/7/318/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Persakis, Anthony & Iatridis, George Emmanuel, 2015. "Earnings quality under financial crisis: A global empirical investigation," Journal of Multinational Financial Management, Elsevier, vol. 30(C), pages 1-35.
    2. Riccardo Cimini, 2015. "How has the financial crisis affected earnings management? A European study," Applied Economics, Taylor & Francis Journals, vol. 47(3), pages 302-317, January.
    3. Gupta, Kartick & Krishnamurti, Chandrasekhar & Tourani-Rad, Alireza, 2013. "Is corporate governance relevant during the financial crisis?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 23(C), pages 85-110.
    4. Persakis, Anthony & Iatridis, George Emmanuel, 2015. "Cost of capital, audit and earnings quality under financial crisis: A global empirical investigation," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 38(C), pages 3-24.
    5. Oskar Kowalewski, 2016. "Corporate governance and corporate performance: financial crisis (2008)," Management Research Review, Emerald Group Publishing Limited, vol. 39(11), pages 1494-1515, November.
    6. Oskar Kowalewski, 2016. "Corporate governance and corporate performance: financial crisis (2008)," Management Research Review, Emerald Group Publishing Limited, vol. 39(11), pages 1494-1515, November.
    7. Nawang Kalbuana & Muhamad Taqi & Lia Uzliawati & Dadan Ramdhani, 2022. "The Effect of Profitability, Board Size, Woman on Boards, and Political Connection on Financial Distress Conditions," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2142997-214, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gutiérrez‐Ponce Herenia & Chamizo González Julián & Manar Moffadi Awad Al‐mohareb, 2024. "Does corporate governance influence readability of the report by the chairman of the board of directors? The case of Jordanian listed companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3535-3550, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joanna Lizińska & Leszek Czapiewski, 2023. "Earnings Management amid the COVID-19 Financial Crisis: The Experience of Poland," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 93-112.
    2. Hsu, Yu-Lin & Yang, Ya-Chih, 2022. "Corporate governance and financial reporting quality during the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 47(PB).
    3. Kjærland, Frode & Kosberg, Fredrik & Misje, Mathias, 2021. "Accrual earnings management in response to an oil price shock," Journal of Commodity Markets, Elsevier, vol. 22(C).
    4. Loureiro, Gilberto & Silva, Sónia, 2022. "Earnings management and stock price crashes post U.S. cross-delistings," International Review of Financial Analysis, Elsevier, vol. 82(C).
    5. Persakis, Anthony & Iatridis, George Emmanuel, 2016. "Audit quality, investor protection and earnings management during the financial crisis of 2008: An international perspective," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 41(C), pages 73-101.
    6. Mao, Yaping & Renneboog, Luc, 2015. "Do managers manipulate earnings prior to management buyouts?," Journal of Corporate Finance, Elsevier, vol. 35(C), pages 43-61.
    7. Fares Alsufy & Malik Abu Afifa & Mohammed Zakaria Soda, 2020. "Mediating Effects of Liquidity in the Relationship between Earnings Quality and Market Value of the Share Price: Evidence from Jordan," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 19(1), pages 17-32, June.
    8. Constantina Backinezos & Stelios Panagiotou & Evangelia Vourvachaki, 2020. "Multiplier effects by sector: an input-output analysis of the Greek economy," Economic Bulletin, Bank of Greece, issue 52, pages 7-28, December.
    9. Nyanine Chuele Fonou-Dombeu & Josue Mbonigaba & Odunayo Magret Olarewaju & Bomi Cyril Nomlala, 2022. "Earnings quality measures and stock return volatility in South Africa," Future Business Journal, Springer, vol. 8(1), pages 1-15, December.
    10. Li, Yingqi & Yu, Junli & Zhang, Zhou & Zheng, Steven Xiaofan, 2016. "The effect of internal control weakness on firm valuation: Evidence from SOX Section 404 disclosures," Finance Research Letters, Elsevier, vol. 17(C), pages 17-24.
    11. Joni, Joni & Ahmed, Kamran & Hamilton, Jane, 2020. "Politically connected boards, family and business group affiliations, and cost of capital: Evidence from Indonesia," The British Accounting Review, Elsevier, vol. 52(3).
    12. Sanoran, Kanyarat (Lek), 2018. "Auditors’ going concern reporting accuracy during and after the global financial crisis," Journal of Contemporary Accounting and Economics, Elsevier, vol. 14(2), pages 164-178.
    13. Jin, Jing & Liao, Rose C. & Loureiro, Gilberto, 2021. "The diverse effects of currency crises on multinational and local firms: The use of foreign currency debt," Journal of Multinational Financial Management, Elsevier, vol. 62(C).
    14. Theophilus Lartey & Albert Danso, 2020. "Globalization, free markets and investor protection," Economics and Business Letters, Oviedo University Press, vol. 9(1), pages 8-13.
    15. Luqiao Zhang & Biao Mi & Yun Shen & Liang Han, 2023. "When in Rome, do as the Romans do: loan syndication in a state-dominated market," Review of Quantitative Finance and Accounting, Springer, vol. 60(4), pages 1469-1494, May.
    16. Sha, Yezhou & Qiao, Lu & Li, Suyang & Bu, Ziwen, 2021. "Political freedom and earnings management," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    17. Mittal, Amit & Garg, Ajay Kumar, 2016. "How do Indian firms cope with a crisis? Earnings management characteristics of CNX Nifty 100 companies," MPRA Paper 85353, University Library of Munich, Germany.
    18. Raffaela Casciello & Marco Maffei & David A. Ziebart, 2024. "Regulatory and contextual factors influencing earnings and capital management decisions: evidence from the European banking sector," Review of Quantitative Finance and Accounting, Springer, vol. 63(1), pages 87-146, July.
    19. Nguyen Vinh Khuong & Phung Anh Thu & Do Thi Thu Lieu & Tran Thi Phuong Anh & Nguyen Thi My Giau & Nguyen Mai Han & Ngo Kim Mo, 2020. "Financial and Non-financial Factors Affecting Board Size of the Listed Firms in Vietnam," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(2), pages 187-195, April.
    20. Le, Ha Thi Thu & Tran, Ha Giang & Vo, Xuan Vinh, 2021. "Audit quality, accruals quality and the cost of equity in an emerging market: Evidence from Vietnam," International Review of Financial Analysis, Elsevier, vol. 77(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:16:y:2023:i:7:p:318-:d:1185159. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.