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1 – 10 of over 1000Dan‐Bee Song, Ho‐Young Lee and Eun‐Jung Cho
The purpose of this paper is to examine whether earnings management is related to incidence of fraud and the amount of misappropriated assets. By examining the research question…
Abstract
Purpose
The purpose of this paper is to examine whether earnings management is related to incidence of fraud and the amount of misappropriated assets. By examining the research question, this study seeks to improve our understanding of using the accrual basis of accounting in identifying the misappropriation of assets.
Design/methodology/approach
This study analyzes 173 sample firms that announced asset misappropriation in the period from 2006 to 2010 in Korea. The study utilizes logistic and linear regressions to test the hypothetical relations set up in the study using discretionary accruals as a proxy of the earnings management. Additionally, the authors performed the robustness test using estimated accruals as a supplementary proxy of the earnings management.
Findings
The authors find that misappropriation of assets has a significant positive association with discretionary accruals. Interestingly, this relationship only holds for firms with negative discretionary accruals. The results suggest that the accrual basis of accounting provides a clue towards uncovering management's misappropriation of assets and thus, plays an important role in reducing existing information asymmetry.
Practical implications
The authors' findings would assist practitioners in detecting asset misappropriation through financial reporting quality and investors and auditors should be more alert to negative discretionary accruals.
Originality/value
There are some studies that examine asset misappropriation. However, most of them are focused on the relation between asset misappropriation and corporate governance. To the best of the authors' knowledge, this is the first study that examines the association between financial reporting quality (i.e. discretionary accruals) and asset misappropriation. The authors' findings provide evidence of the usefulness of accrual basis of accounting in detecting fraud and enhance the understanding of income‐decreasing earnings management.
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Sameer T. Mustafa and Nourhene Ben Youssef
The purpose of this paper is to investigate the relationship between the financial expertise of the audit committee (AC) and the incidence of misappropriation of assets in…
Abstract
Purpose
The purpose of this paper is to investigate the relationship between the financial expertise of the audit committee (AC) and the incidence of misappropriation of assets in publicly held companies in the USA.
Design/methodology/approach
The sample consists of 28 publicly held companies in the USA experiencing misappropriation of assets from 1987 to 1998, as well as 28 control companies matched according to size, industry, and time period. The effectiveness of the AC's financial expertise in reducing the occurrence of misappropriation of assets is examined by logistic models using two specific types of financial expertise: accounting and non‐accounting financial expertise.
Findings
The results support the notion that an independent AC member is only effective in reducing the occurrence of misappropriation of assets in publicly held companies if he/she is also a financial expert.
Research limitations/implications
The paper contributes to the debate on the appropriate definition of “financial expert” and the efficacy of the financial expertise of AC members – as defined by the Sarbanes‐Oxley legislation – in reducing the incidence of misappropriation of assets in publicly held companies in the USA. The paper includes only 28 cases of misappropriation of assets by employees involving collusion with an outsider, as discovered and reported in the news (i.e. newsworthy cases).
Originality/value
While previous studies have drawn attention to the relationship between AC independence and misappropriation of assets, there is no empirical evidence to support or to refute the hypothesis that financial expertise has an impact on the occurrence of misappropriation of assets. This paper is the first to examine the association between the effectiveness of the AC and the occurrence of misappropriation of assets by testing the interaction between AC members' financial expertise and their independence.
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Theodora Aba Abekah Koomson, Godfred Matthew Yaw Owusu, Rita Amoah Bekoe and Maureen Oquaye
This paper aims to investigate the prevalence of asset misappropriation at the workplace and examines the dominant factors that influence individuals to misappropriate assets at…
Abstract
Purpose
This paper aims to investigate the prevalence of asset misappropriation at the workplace and examines the dominant factors that influence individuals to misappropriate assets at the workplace. Relying on the most recent theory on fraud (the stimulus/pressure, capability, opportunity, rationalization and ego (S.C.O.R.E. model) as the theoretical basis, the study examines the effect of pressure, rationalization, capability, opportunity/strength of internal control system and ego on asset misappropriation at the workplace while controlling for the effect of ethical values.
Design/methodology/approach
A total of 883 valid responses from individuals working in various organizations in Ghana were collected by means of a self-administered questionnaire. The hypothesized relationships of the study were tested by means of a structural model analysis using the partial least square based structural equation modelling technique.
Findings
Results from the structural model analysis demonstrate that individuals misappropriate assets at their workplace due to pressures they face, their ability to rationalize their actions as not wrong, their capabilities and their egos. The results, however, indicate that the extent to which an individual will misappropriate asset depends, to a large extent, on the person’s perception of the strength of internal control mechanisms at the workplace. The findings of the study make significant contributions to the fraud discourse.
Originality/value
Theoretically, the study is among the first to provide empirical support for the applicability of the S.C.O.R.E. model in the fraud literature. Again, this study extends knowledge on occupational fraud literature by examining an area that has received the least research attention: asset misappropriation. The study also highlights the important role of internal controls in reducing the occurrence of asset misappropriation at the workplace.
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Tarjo Tarjo, Alexander Anggono, Mohammad Nizarul Alim, Jamaliah Said and Zuraidah Mohd-Sanusi
This study aims to examine the effects of religiosity, ethical leadership and local wisdom on the relationship between fraud risk management and asset misappropriation in…
Abstract
Purpose
This study aims to examine the effects of religiosity, ethical leadership and local wisdom on the relationship between fraud risk management and asset misappropriation in Indonesia.
Design/methodology/approach
Data were collected using a set of questionnaire surveys administered to the head office, local government internal auditors (inspectorate) and local government employees in Indonesia. Sample selection used purposive techniques and obtained 151 respondents who became research data. The dependent variable was asset misappropriation. The independent variable was fraud risk management. The moderating variables for this study were religiosity, leader ethics and local wisdom. The analysis technique applied the structural equation model-partial least square (SEM-PLS).
Findings
Fraud risk management has a significant negative effect on asset misappropriation. In addition, this study finds evidence that religiosity, ethical leadership and local wisdom increase fraud risk management against asset misappropriation.
Research limitations/implications
This study proposes an integrative model that enables local governments to understand fraud risk management. By integrating religiosity, ethical leadership and local wisdom, managers can design strategies to prevent asset misappropriation.
Originality/value
This research has the advantage of proposing an integrative model for mitigating asset misappropriation. Research on asset misappropriation is limited. Therefore, this study provides insights into fraud risk management, particularly in Indonesia’s local governments. In addition, this study adds ethical aspects such as religiosity, leadership and local wisdom to complement the weaknesses of fraud risk management and reduce the potential for asset misappropriation.
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Mohd Azril Rezza Mohd Razmin, Amri Mohamad and Maheran Zakaria
This study aims to investigate the factors that influence asset misappropriation fraud among police officers in the Internal Security and Public Order (Malay: Keselamatan Dalam…
Abstract
Purpose
This study aims to investigate the factors that influence asset misappropriation fraud among police officers in the Internal Security and Public Order (Malay: Keselamatan Dalam Negeri dan Ketenteraman Awam [KDNKA]) Department, Royal Malaysian Police (RMP).
Design/methodology/approach
Primary data were collected from a questionnaire-based survey and the data were analysed using descriptive analysis, correlation analysis and multiregression.
Findings
The element of pressure was found to have a negative relationship with asset misappropriation fraud. This result shows the uniqueness of the KDNKA Department in the RMP. The other three elements are found to have a significant positive relationship with asset misappropriation fraud.
Practical implications
This study’s findings can aid academicians in gaining a better understanding of the literature surrounding fraud diamond theory and aid the policymakers in recognizing the signs and possibilities of asset misappropriation fraud in public agencies.
Originality/value
To the best of the authors’ knowledge, this is the first study that uses the KDNKA Department which is the second largest department in RMP as a population in fraud study.
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Soheil Kazemian, Jamaliah Said, Elham Hady Nia and Hamidreza Vakilifard
The paper aims at examining the influences of the elements of fraud diamond on the asset misappropriation within the banking industry of Iran. Primary data were collected through…
Abstract
Purpose
The paper aims at examining the influences of the elements of fraud diamond on the asset misappropriation within the banking industry of Iran. Primary data were collected through 191 survey questionnaires administered among employees of the top three banks in Iran, which own above 60 per cent of market shares in the banking industry of the country.
Design/methodology/approach
Primary data were collected through 191 survey questionnaires administered among employees of the top three banks in Iran, which own above 60 per cent of market shares in the banking industry of the country.
Findings
Results strongly supported that all four elements of fraud risk significantly influence bank employee asset misappropriation in Iran. To minimize employee fraud, the banking industry should reduce opportunities and employee negative rationalization through strong internal control.
Research limitations/implications
The findings of this study are useful for policymakers, bank managers, industry practitioners and academics to understand and subsequently implement strategies to mitigate asset misappropriation.
Practical implications
Managerial implications, limitations of the study and suggestions for future research are also included in this paper.
Originality/value
The main value of this paper is the determination of the key variables that constitute the fraud diamond theory and its dimensions on the asset misappropriation within the banking industry in Iran.
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Haniza Hanim Mustafa Bakri, Norazida Mohamed and Jamaliah Said
This paper aims to evaluate the effects of fraud risk elements and integrity on asset misappropriation in the Royal Malaysian Police (RMP). In addition, this research also…
Abstract
Purpose
This paper aims to evaluate the effects of fraud risk elements and integrity on asset misappropriation in the Royal Malaysian Police (RMP). In addition, this research also examines whether integrity moderates the relationship between fraud risk elements and asset misappropriation.
Design/methodology/approach
Data are gathered from the responses of the questionnaires distributed to the RMP. A total of 200 questionnaires were distributed based on simple random selection from five RMP centres in the capital city. Out of 200 questionnaires distributed, only 189 were returned.
Findings
The findings indicate that the existence of fraud risk elements significantly affects the incident of asset misappropriation. An interesting finding was made that integrity is negatively related to asset misappropriation. This implies that integrity is an important value in minimising the occurrence of asset misappropriation. The results also indicate that minimising fraud risk elements is crucial in reducing the incident of asset misappropriation.
Originality/value
This present paper contributes to the literature by investigating a commonly proposed but underexplored elements of integrity in mitigating fraud. Incorporating integrity and fraud risk elements simultaneously in a single framework in context of RMP would enhance the understanding and will be able to provide a framework for practitioners on how to mitigate the incident of fraud.
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Jamaliah Said, Md. Mahmudul Alam, Zulyanti Abdul Karim and Razana Juhaida Johari
The purpose of this paper is to conduct an empirical analysis of the factors that determine the occupational fraud behavior.
Abstract
Purpose
The purpose of this paper is to conduct an empirical analysis of the factors that determine the occupational fraud behavior.
Design/methodology/approach
This study utilizes primary data collected by a questionnaire-based survey on 186 police officials of Malaysia including Sabah and Sarawak. Data are analyzed using descriptive statistics, factor analysis, and cross-sectional regression.
Findings
The results derived in the study showed a statistically significant positive relationship between three basic variables of the fraud theory – pressure, opportunity, and rationalization with asset misappropriation. Moreover, this study revealed that religiosity is statistically significantly and negatively correlated to asset misappropriation. Therefore, the higher religiosity of an individual correlates with the lower probability involve in asset misappropriation.
Practical implications
The findings will help Anti-Corruption Commission, Enforcement Agency of Integrity Commission, Police Department, and relevant agencies from Malaysia and other countries to design policies for reducing cases of fraudulent behavior.
Originality/value
This study is an original work based on the primary data collection.
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Eberhard Feess and Yuriy Timofeyev
Auditors use behavioral red flags (BRFs) to examine which individuals are more prone to unwarranted behavior such as corruption and asset misappropriation. Using a rich data set…
Abstract
Auditors use behavioral red flags (BRFs) to examine which individuals are more prone to unwarranted behavior such as corruption and asset misappropriation. Using a rich data set from the Association of Certified Fraud Examiners (ACFE), we analyze the impact of BRFs on loss sizes from asset misappropriation. We control for antifraud mechanisms established at the company level and other factors both at the individual and the firm level. Performing an exploratory factor analysis yields six factors for BRFs which capture the principal perpetrator's situation both at the private level and the workplace. A general wheeler-dealer attitude and financial distress significantly increase loss sizes. By contrast, we find no evidence that nonmonetary private problems lead to higher losses.
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