The Price to Pay: An Empirical Analysis of the Relationship Between Hexagon Fraud and Financial Performance of East Javanese Banks
DOI:
https://doi.org/10.26905/icgss.v9i1.15796Keywords:
Hexagon Fraud, Financial Performance, Corporate Governance, Path Analysis, East Javanese Banks.Abstract
This study aims to analyze the relationship between Hexagon Fraud and financial performance in East Javanese banks, with Corporate Governance as a moderating variable. This study uses path analysis with a population of 437 banks. The sample size, determined using the Slovin formula, is 209 banks. The results indicate that Hexagon Fraud significantly affects financial performance, and Corporate Governance substantially moderates the relationship between Hexagon Fraud and financial performance. Improved Corporate Governance can weaken the negative impact of Hexagon Fraud on banks' financial performance, highlighting the importance of transparent and accountable governance practices for banks.
Downloads
References
ACFE. (2023). Fraud 101: What Is Fraud? https://www.acfe.com/fraudresources/fraud-101-what-is-fraud ACFE. (2024). Association of Certified Fraud Examiners. The Nation's Occupational Fraud 2024 : A Report To The Nations. Association of Certified Fraud Examiners, 1–106.
Akinbowale, O. E., Klingelhöfer, H. E., Zerihun, M. F., & Mashigo, P. (2024). Development of a policy and regulatory framework for mitigating cyberfraud in the South African banking industry. Heliyon, 10(1).
Albrecht, W. S., Albrecht, C. O., & Albrecht, C. C. (2023). Fraud examination (6th ed.). Cengage Learning.
Albrecht, W. S., Albrecht, C. O., Albrecht, C. C., & Zimbelman, M. F. (2006). Fraud examination (p. 696). New York, NY: Thomson South-Western.
Aluko, A., & Bagheri, M. (2012). The impact of money laundering on economic and financial stability and on political development in developing countries: The case of Nigeria. Journal of Money Laundering Control, 15(4), 442-457.
Bank Indonesia. (2024). Annual Report: Banking Performance in Indonesia. Jakarta, Indonesia: Bank Indonesia.
Bank Indonesia. (2024). Economic and financial statistics. https://www.bi.go.id
BPS (Badan Pusat Statistik). (2024). Regional economic indicators: East Java. https://www.bps.go.id
BPS (2024). East Java Economic Indicators. Badan Pusat Statistik.
Brealey, R. A., Myers, S. C., & Allen, F. (2014). Principles of corporate finance. McGraw-hill.
Dewi, N. K., Sudjana, G., & Hakim, A. (2022). The impact of fraudulent activities on the financial performance of banks in Indonesia. Journal of Financial Crime, 29(4), 982-995. https://doi.org/10.1108/JFC-12-2021-0259
Dewi, R. S., Prasetyo, B., & Sukardi, S. (2022). Corporate governance as a moderating variable in the relationship between financial transparency and fraud risk in Indonesian banks. Journal of Banking and Finance Review, 11(2), 150-162. https://doi.org/10.1016/j.bafr.2021.09.010
Fadhila, H., Ali, A. M., & Anis, J. (2014). Governance mechanisms, managerial’s commitment bias and firm’s investment decision escalation: Failure of firm’s crises communication: Bayesian network method. Asian Journal of Empirical Research, 4(2), 125-149.
Fama, E. F., & Jensen, M. C. (1985). Organizational forms and investment decisions. Journal of financial Economics, 14(1), 101-119.
Fama, E. F., & Jensen, M. C. (2022). Separation of ownership and control. Journal of Law and Economics, 26(2), 301-325. https://doi.org/10.1086/467037
Fama, E. F., & Jensen, M. C. (2022). Separation of ownership and control. Journal of Law and Economics, 26(2), 301-325.
Free, C. (2015). Looking through the fraud triangle: A review and call for new directions. Meditari Accountancy Research, 23(2), 175-196.
Gitman, L. J., & Zutter, C. J. (2023). Principles of Managerial Finance (16th ed.). Pearson.
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2022). Multivariate Data Analysis (8th ed.). Cengage Learning.
Hermanson, D. R., & Wolfe, D. T. (2024). The Fraud Diamond. CPA Journal, 94.
Kline, R. B. (2023). Principles and practice of structural equation modeling (5th ed.). Guilford Press.
Kompas. (2023). Cases of Financial Fraud in East Java’s Banking Sector. Retrieved from https://www.kompas.com
Lawrence, G. J., & Zutter, C. J. (2012). Principles of managerial finance. England: Pearson.
Madura, J. (2021). Financial markets and institutions. Cengage.
Malagueño, R., Albrecht, C., Ainge, C., & Stephens, N. (2010). Accounting and corruption: a cross‐country analysis. Journal of Money Laundering Control, 13(4), 372-393.
Mawutor, J. K., Enofe, A., Embele, K., Ndu, A. R., & Awodola, O. E. (2019). Fraud and performance of deposit money banks. Accounting and Financial Research, 8(2), 202-213.
Muizzuddin, M., Tandelilin, E., Hanafi, M. M., & Setiyono, B. (2021). Does institutional quality matter in the relationship between competition and bank stability? Evidence from Asia. Journal of Indonesian Economy and Business, 36(3), 283-301.
Murhadi, W. R., Anandya, D., Darmasetiawan, N. K., Trisnawati, J. D., Mahadwartha, P. A., & Tandelilin, E. (2023, April). Correction to: Proceedings of the 19th International Symposium on Management (INSYMA 2022). In 19th International Symposium on Management (INSYMA 2022) (pp. C1-C1). Atlantis Press.
Nyakarimi, S. (2022). Probable earning manipulation and fraud in banking sector. Empirical study from East Africa. Cogent Economics & Finance, 10(1), 2083477.
OECD (Organisation for Economic Co-operation and Development). (2023). Principles of corporate governance. https://www.oecd.org
OECD. (2023). Corporate Governance Principles. Paris, France: OECD Publishing.
OJK (Otoritas Jasa Keuangan). (2023). Laporan tahunan Otoritas Jasa Keuangan. https://www.ojk.go.id
Rae, K., & Subramaniam, N. (2021). Quality of internal control procedures: Antecedents and moderating role in detecting financial statement fraud. Journal of Accounting Research, 59(1), 55-79. https://doi.org/10.1111/jar.12416
Sánchez-Aguayo, M., Urquiza-Aguiar, L., & Estrada-Jiménez, J. (2021). Fraud detection using the fraud triangle theory and data mining techniques: A literature review. Computers, 10(10), 121.
Sari, M. P., Dewi, S. R. K., Raharja, S., Dinanti, A., & Rizkyana, F. W. (2023). Good corporate governance as moderation on sustainability report disclosure. Journal of Governance and Regulation.
Tandelilin, E., Supriyatna, A., & Susilo, H. (2022). The role of corporate governance in reducing fraud risk in the Indonesian banking sector. Asian Journal of Business Ethics, 11(2), 178-190. https://doi.org/10.1007/s13520-022-00143-w
Usman, B., & Tandelilin, E. (2014). Internet search traffic and its influence on liquidity and returns of Indonesia stocks: An empirical study. Journal of Indonesian Economy and Business: JIEB., 29(3), 203.
Wells, J. T. (2022). Principles of Fraud Examination (6th ed.). John Wiley & Sons.
World Bank. (2023). Indonesia economic report: Challenges and prospects. https://www.worldbank.org/en/country/indonesia/publication/economic-report-2023
Yamane, T. (1967). Statistics: An Introductory Analysis (2nd ed.). Harper and Row.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Proceedings of International Conference of Graduate School on Sustainability
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Licensed
Authors who publish in this journal agree to the following terms: Proceeding of International Conference of Graduate School on Sustainability is licensed under Creative Commons Attribution-ShareAlike 4.0 International. Creative Commons Attribution-ShareAlike 4.0 International License (CC BY 4.0) is applied when mandated by research funders, such as those who have signed. Open Access articles in Jurnal Cakrawala Hukum are published under theCreative Commons Attribution-ShareAlike 4.0 International (CC BY 4.0) license. The copyright of the received article shall be assigned to the journal as the publisher of the journal. The intended copyright includes the right to publish the article in various forms (including reprints). The journal maintains the publishing rights to the published articles. Authors must agree to the copyright transfer agreement by checking the Copyright Notice column at the initial stage when submitting the article.
