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The Role of Power in Financial Statement Fraud Schemes

Author

Listed:
  • Chad Albrecht
  • Daniel Holland
  • Ricardo Malagueño
  • Simon Dolan
  • Shay Tzafrir

Abstract

In this paper, we investigate a large-scale financial statement fraud to better understand the process by which individuals are recruited to participate in financial statement fraud schemes. The case reveals that perpetrators often use power to recruit others to participate in fraudulent acts. To illustrate how power is used, we propose a model, based upon the classical French and Raven taxonomy of power, that explains how one individual influences another individual to participate in financial statement fraud. We also provide propositions for future research. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Chad Albrecht & Daniel Holland & Ricardo Malagueño & Simon Dolan & Shay Tzafrir, 2015. "The Role of Power in Financial Statement Fraud Schemes," Journal of Business Ethics, Springer, vol. 131(4), pages 803-813, November.
    • Handle: RePEc:kap:jbuset:v:131:y:2015:i:4:p:803-813
    DOI: 10.1007/s10551-013-2019-1
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    Cited by:

    1. Maas, Victor S. & Yin, Huaxiang, 2022. "Finding partners in crime? How transparency about managers’ behavior affects employee collusion," Accounting, Organizations and Society, Elsevier, vol. 96(C).
    2. Monica Ramos Montesdeoca & Agustín J. Sánchez Medina & Felix Blázquez Santana, 2019. "Research Topics in Accounting Fraud in the 21st Century: A State of the Art," Sustainability, MDPI, vol. 11(6), pages 1-31, March.
    3. Denton Collins & Gary Fleischman & Stacey Kaden & Juan Manuel Sanchez, 2018. "How Powerful CFOs Camouflage and Exploit Equity-Based Incentive Compensation," Journal of Business Ethics, Springer, vol. 153(2), pages 591-613, December.
    4. Dr. Solomon Abeki & Aliyu, Abubakar Sadiq; Msc, 2023. "The Influence of Tone at the Top on Financial Statement Fraud of Listed Manufacturing Firms in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(9), pages 1221-1242, September.
    5. Gro Kvåle & Zuzana Murdoch, 2022. "Making Sense of Stigmatized Organizations: Labelling Contests and Power Dynamics in Social Evaluation Processes," Journal of Business Ethics, Springer, vol. 178(3), pages 675-693, July.
    6. Gianni Onesti & Riccardo Palumbo, 2023. "Tone at the Top for Sustainable Corporate Governance to Prevent Fraud," Sustainability, MDPI, vol. 15(3), pages 1-16, January.
    7. Dr. Solomon Abeki, 2023. "Internal Control System and Financial Statement Fraud of Quoted Banks in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(9), pages 1158-1200, September.
    8. Liu, Chenyong & Ryan, David & Lin, Guoyu & Xu, Chunhao, 2023. "No rose without a thorn: Corporate teamwork culture and financial statement misconduct," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).
    9. Paulina Roszkowska & Domènec Melé, 2021. "Organizational Factors in the Individual Ethical Behaviour. The Notion of the “Organizational Moral Structure”," Humanistic Management Journal, Springer, vol. 6(2), pages 187-209, July.
    10. Dayah Abdi Kulmie & Mohamud Dahir Hilif & Mukhtar Sheikh Hussein, 2023. "Socioeconomic Consequences of Corruption and Financial Crimes," International Journal of Economics and Financial Issues, Econjournals, vol. 13(5), pages 88-95, September.
    11. AWALLUDDIN Muhammad Aiman & TUAN NOORIANI Tuan Ismail & MAZNORBALIA Anisa Safiah, 2022. "The Relationship Between Perceived Pressure, Perceived Opportunity, Perceived Rationalization And Fraud Tendency Among Employees: A Study From The People’S Trust In Malaysia," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 17(2), pages 23-43, August.
    12. Xin Qu & Daifei Yao & Majella Percy, 2020. "How the Design of CEO Equity-Based Compensation can Lead to Lower Audit Fees: Evidence from Australia," Journal of Business Ethics, Springer, vol. 163(2), pages 281-308, May.
    13. Madzivire E.T & Nyamwanza L & Mushonga W & Takachicha M. T & Mulonda D, 2020. "An Investigation on the Effectiveness of Forensic Audit as a Tool for Fraud Detection and Prevention," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 10(2), pages 49-67.
    14. Ida Bagus Anom Yasa & I Ketut Sukayasa & Ni Made Mega Abdi Utami, 2022. "Organizational culture moderates the effect of bystander effect and internal control on accounting fraud trends in village credit institutions in Jembrana Regency," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(7), pages 210-217, October.
    15. Anand Jha, 2019. "Financial Reports and Social Capital," Journal of Business Ethics, Springer, vol. 155(2), pages 567-596, March.

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