The Influence Of Coronavirus Pandemic (Covid-19) Situations On The Relationship Between Fraudulent Financial Statement And Real Earnings Management (With Perspective Of Fraud Hexagon Theory)
Vinola Herawaty1, Armetha Rizqia Sari2

Universitas Trisakti

Abstract

Covid 19 pandemic situation has caused many companies to experience a decline economic activity which encourages them to carry out real earnings management. This situation may create opportunities for companies to make their financial reports appear superior, by doing fraudulent financial statements. This research aims to determine and analyze the effect of covid-19 pandemic situations on relation between fraudulent financial statement with the perspective of fraud hexagon theory including stimulus/pressure, capability, opportunity, rationalization, arrogance, and collusion on real earnings management.
This research uses quantitative methods and denotes a hypothesis testing, The data used is secondary data sourced from the annual reports of consumer cyclicals companies that have been listed on the Indonesia Stock Exchange (IDX) prior (2019) and during the Covid-19 pandemic (2020). Data were collected using purposive sampling method.
The result of this research concluded that financial stability and opportunity had positive effects on real earnings management, while the capability, rationalization, arrogance, and collusion had no effect. It was found that the pandemic situations did not strengthen the effect of fraudulent financial statements on earnings management.
Therefore, the company^ efforts are to maintain the condition of the company^s cash flow so that its finances remain stable so that its activities are not problematic. The effort that can be made by the company is to place an independent commissioner with the title of accountant or CPA who has the ability to detect fraudulent acts in financial statements.

Keywords: Fraudulent financial statement, real earnings management, Pandemic covid-19 situation t

Topic: Other Social Sciences and Humanities