IDEAS home Printed from https://ideas.repec.org/a/sae/globus/v21y2020i2p507-525.html
   My bibliography  Save this article

Behavioural Red Flags of Fraud: An Ex Post Assessment of Types and Frequencies

Author

Listed:
  • Namrata Sandhu

Abstract

A number of researchers and professional fraud examiners have emphasized the need for early detection of frauds. Though there are many ways in which frauds can be detected, a particularly effective and inexpensive way is to identify fraudsters by scrutinizing personnel behaviour for peculiarities typical of fraudsters. Towards this end, the present study compiles a checklist of behavioural red flags of fraud based on data collected with the help of 41 semi-structured interviews. The interviewees constitute people who have personally investigated or closely observed a fraud in the last 3 years. A mixed methods triangulation approach is used to quantify the qualitative data collected from the interviews. Data analysis reveals 16 different behavioural red flags exhibited by fraudsters. An examination of frequencies indicates that strong ambition, extended working hours, social aloofness, dissatisfaction with current job and living standard disproportionate to current means are the most frequently displayed behavioural red flags of fraud. The study also shows that fraudsters exhibit three or four behavioural red flags in a majority of cases. Implications for anti-fraud practitioners are discussed.

Suggested Citation

  • Namrata Sandhu, 2020. "Behavioural Red Flags of Fraud: An Ex Post Assessment of Types and Frequencies," Global Business Review, International Management Institute, vol. 21(2), pages 507-525, April.
  • Handle: RePEc:sae:globus:v:21:y:2020:i:2:p:507-525
    DOI: 10.1177/0972150919850410
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0972150919850410
    Download Restriction: no

    File URL: https://libkey.io/10.1177/0972150919850410?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Vikas Anand & M. Tina Dacin & Pamela Murphy, 2015. "The Continued Need for Diversity in Fraud Research," Journal of Business Ethics, Springer, vol. 131(4), pages 751-755, November.
    2. Jeffrey Cohen & Yuan Ding & Cédric Lesage & Hervé Stolowy, 2010. "Corporate Fraud and Managers’ Behavior: Evidence from the Press," Journal of Business Ethics, Springer, vol. 95(2), pages 271-315, September.
    3. Lauren M. Ross & Gregory D. Squires, 2011. "The Personal Costs of Subprime Lending and the Foreclosure Crisis: A Matter of Trust, Insecurity, and Institutional Deception," Social Science Quarterly, Southwestern Social Science Association, vol. 92(1), pages 140-163, March.
    4. NIAMH M. BRENNAN & MARY McGRATH, 2007. "Financial Statement Fraud: Some Lessons from US and European Case Studies," Australian Accounting Review, CPA Australia, vol. 17(42), pages 49-61, July.
    5. Murphy, Pamela R., 2012. "Attitude, Machiavellianism and the rationalization of misreporting," Accounting, Organizations and Society, Elsevier, vol. 37(4), pages 242-259.
    6. Brian W. Mayhew & Pamela R. Murphy, 2014. "The Impact of Authority on Reporting Behavior, Rationalization and Affect," Contemporary Accounting Research, John Wiley & Sons, vol. 31(2), pages 420-443, June.
    7. Alexander Dyck & Adair Morse & Luigi Zingales, 2010. "Who Blows the Whistle on Corporate Fraud?," Journal of Finance, American Finance Association, vol. 65(6), pages 2213-2253, December.
    8. Sanjeev Jha & J. Christopher Westland, 2013. "A Descriptive Study of Credit Card Fraud Pattern," Global Business Review, International Management Institute, vol. 14(3), pages 373-384, September.
    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. Namrata Sandhu & Shefali Saluja, 2023. "Fraud Triangle as an Audit Tool," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 48(3), pages 418-443, August.

    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. Mark E. Lokanan & Prerna Sharma, 2023. "Two Decades of Accounting Fraud Research: The Missing Meso-Level Analysis," SAGE Open, , vol. 13(3), pages 21582440231, September.
    2. Hengky Latan & Charbel Jose Chiappetta Jabbour & Ana Beatriz Lopes de Sousa Jabbour, 2019. "‘Whistleblowing Triangle’: Framework and Empirical Evidence," Journal of Business Ethics, Springer, vol. 160(1), pages 189-204, November.
    3. W. Robert Knechel & Natalia Mintchik, 2022. "Do Personal Beliefs and Values Affect an Individual’s “Fraud Tolerance”? Evidence from the World Values Survey," Journal of Business Ethics, Springer, vol. 177(2), pages 463-489, May.
    4. Nadia Smaili & Paulina Arroyo, 2019. "Categorization of Whistleblowers Using the Whistleblowing Triangle," Journal of Business Ethics, Springer, vol. 157(1), pages 95-117, June.
    5. Christian Hauser, 2019. "Fighting Against Corruption: Does Anti-corruption Training Make Any Difference?," Journal of Business Ethics, Springer, vol. 159(1), pages 281-299, September.
    6. Jeffrey Cohen & Yuan Ding & Cédric Lesage & Hervé Stolowy, 2017. "Media Bias and the Persistence of the Expectation Gap: An Analysis of Press Articles on Corporate Fraud," Journal of Business Ethics, Springer, vol. 144(3), pages 637-659, September.
    7. Jeffrey Cohen & Yuan Ding & Cédric Lesage & Hervé Stolowy, 2010. "Corporate Fraud and Managers’ Behavior: Evidence from the Press," Journal of Business Ethics, Springer, vol. 95(2), pages 271-315, September.
    8. Xin Xu & Feng Xiong & Zhe An, 2023. "Using Machine Learning to Predict Corporate Fraud: Evidence Based on the GONE Framework," Journal of Business Ethics, Springer, vol. 186(1), pages 137-158, August.
    9. Anastasia A. Zakolyukina, 2018. "How Common Are Intentional GAAP Violations? Estimates from a Dynamic Model," Journal of Accounting Research, Wiley Blackwell, vol. 56(1), pages 5-44, March.
    10. Namrata Sandhu & Shefali Saluja, 2023. "Fraud Triangle as an Audit Tool," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 48(3), pages 418-443, August.
    11. Daniella Juric & Brendan O’Connell & Michaela Rankin & Jacqueline Birt, 2018. "Determinants of the Severity of Legal and Employment Consequences for CPAs Named in SEC Accounting and Auditing Enforcement Releases," Journal of Business Ethics, Springer, vol. 147(3), pages 545-563, February.
    12. Ling L. Harris & Scott B. Jackson & Joel Owens & Nicholas Seybert, 2022. "Recruiting Dark Personalities for Earnings Management," Journal of Business Ethics, Springer, vol. 178(1), pages 193-218, June.
    13. 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.
    14. Xiaotao Liu & Arnold Wright & Yi-Jing Wu, 2015. "Managers’ Unethical Fraudulent Financial Reporting: The Effect of Control Strength and Control Framing," Journal of Business Ethics, Springer, vol. 129(2), pages 295-310, June.
    15. Reckers, Philip & Samuelson, Melissa, 2016. "Toward resolving the debate surrounding slippery slope versus licensing behavior: The importance of individual differences in accounting ethical decision making," Advances in accounting, Elsevier, vol. 34(C), pages 1-16.
    16. Pamela R. Murphy & Michael Wynes & Till‐Arne Hahn & Patricia G. Devine, 2020. "Why Are People Honest? Internal and External Motivations to Report Honestly†," Contemporary Accounting Research, John Wiley & Sons, vol. 37(2), pages 945-981, June.
    17. Su, Fei & Feng, Xu & Tang, Songlian, 2021. "Do site visits mitigate corporate fraudulence? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 78(C).
    18. Xin Cheng & Dan Palmon & Yinan Yang & Cheng Yin, 2023. "Strategic Earnings Announcement Timing and Fraud Detection," Journal of Business Ethics, Springer, vol. 182(3), pages 851-874, January.
    19. Waseem Yousaf & Raheel Jamil, 2020. "Does Moral Intensity Affect the Whistleblowing Intentions?," iRASD Journal of Management, International Research Alliance for Sustainable Development (iRASD), vol. 2(2), pages 84-99, December.
    20. Martin Mutschmann & Tim Hasso & Matthias Pelster, 2022. "Dark Triad Managerial Personality and Financial Reporting Manipulation," Journal of Business Ethics, Springer, vol. 181(3), pages 763-788, December.

    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:sae:globus:v:21:y:2020:i:2:p:507-525. 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: SAGE Publications (email available below). General contact details of provider: http://www.imi.edu/ .

    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.