The Effect of CFO Demographics on Fraudulent Financial Reporting

Yulia Frischanita, Yustrida Bernawati

doi:10.24912/ja.v24i1.639

Abstract

This study aims to examine the effect of CFO demographics on financial statement fraud. The results contribute to companies for increasing CEO and CFO elections and corporate governance designed to prevent illegal actions. The sample in this study was manufacturing companies listed on the Indonesia Stock Exchange in 2016-2018 with 308 data and hypothesis testing using multiple regression analysis techniques. The test results show that the age of the CFO affects the fraudulent financial statements. More mature the CFO engage with fraudulent financial statements. Other results indicate that the level of education, gender and experience of the CFO have no effect on financial statement fraud. The control variable used is ROA which has a positive effect on financial statement fraud. While company size and leverage have a negative effect on financial statement fraud.

Highlights

Fraudulent financial statements are one of the white-collar crimes that cause losses of up to billions of rupiah
This study aims to examine the effect of CFO demographics on financial statement fraud
The statistical result showed that Hypothesis 1 is accepted: the age of CFO has a positive influence on financial statement fraud

Summary

Introduction

Fraudulent financial statements are one of the white-collar crimes that cause losses of up to billions of rupiah. Only 2%, but the resulting losses were the most dominant, namely exceeding Rp10 billion (ACFE Indonesia, 2017). Garuda Indonesia recorded a loss of USD216.5 million, but in 2018 the company recorded a profit of up to USD809.8. Garuda Indonesia cheated financial reporting, namely window dressing, by recognizing all revenue that would occur in 2019 in 2018. Garuda Indonesia, as the party responsible for the truth of the financial statements, is required to pay a fine of up to Rp 100 million (Hartomo, 2019)

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Conclusion