Environment Uncertainty, Earnings Volatility and Their Role in Financial Statement Fraud?

This study examines the influence of environmental uncertainty (EU) and earnings volatility (EV) on fraudulent financial statements (FFS)  in Indonesia’s manufacturing sector. The research utilises observational data from 902 instances across 188 manufacturing companies from 2019 to 2023, employing...

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Main Authors: Lin Oktris, Agustin Fadjarenie, Apollo Daito, Zuha Rosufila Bt Abu Hasan
Format: Article
Language:English
Published: Universitas Tarumanagara 2025-01-01
Series:Jurnal Akuntansi
Subjects:
Online Access:http://ecojoin.org/index.php/EJA/article/view/2441
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author Lin Oktris
Agustin Fadjarenie
Apollo Daito
Zuha Rosufila Bt Abu Hasan
author_facet Lin Oktris
Agustin Fadjarenie
Apollo Daito
Zuha Rosufila Bt Abu Hasan
author_sort Lin Oktris
collection DOAJ
description This study examines the influence of environmental uncertainty (EU) and earnings volatility (EV) on fraudulent financial statements (FFS)  in Indonesia’s manufacturing sector. The research utilises observational data from 902 instances across 188 manufacturing companies from 2019 to 2023, employing multiple regression analysis to test the relationships between variables. The results reveal that EV has a significant positive effect on FFS, while EU does not show a significant impact. The novelty of this study lies in its integrative approach, considering the interactive effects between EU and EV, which have been underexplored in previous literature. The findings suggest that high earnings volatility can be an early indicator of financial statement manipulation. The practical implications emphasise the importance of closely monitoring earnings volatility by regulators and auditors as a preventive measure against financial fraud and strengthening internal control mechanisms and corporate governance to minimise the risk of financial statement manipulation.
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institution Kabale University
issn 1410-3591
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language English
publishDate 2025-01-01
publisher Universitas Tarumanagara
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series Jurnal Akuntansi
spelling doaj-art-7b512de4b35c47aeb7f22194f6084f942025-01-31T07:22:49ZengUniversitas TarumanagaraJurnal Akuntansi1410-35912549-88002025-01-01291486910.24912/ja.v29i1.24412425Environment Uncertainty, Earnings Volatility and Their Role in Financial Statement Fraud?Lin Oktris0Agustin Fadjarenie1Apollo Daito2Zuha Rosufila Bt Abu Hasan3Department of Accounting, Faculty of Economy and Business, Mercu Buana UniversityDepartment of Accounting, Faculty of Economy and Business, Mercu Buana University, JakartaDepartment of Accounting, Faculty of Economy and Business, Mercu Buana University, JakartaBachelor of Management Programme, University Terengganu MalaysiaThis study examines the influence of environmental uncertainty (EU) and earnings volatility (EV) on fraudulent financial statements (FFS)  in Indonesia’s manufacturing sector. The research utilises observational data from 902 instances across 188 manufacturing companies from 2019 to 2023, employing multiple regression analysis to test the relationships between variables. The results reveal that EV has a significant positive effect on FFS, while EU does not show a significant impact. The novelty of this study lies in its integrative approach, considering the interactive effects between EU and EV, which have been underexplored in previous literature. The findings suggest that high earnings volatility can be an early indicator of financial statement manipulation. The practical implications emphasise the importance of closely monitoring earnings volatility by regulators and auditors as a preventive measure against financial fraud and strengthening internal control mechanisms and corporate governance to minimise the risk of financial statement manipulation.http://ecojoin.org/index.php/EJA/article/view/2441environmental uncertainty; earnings volatility; fraudulent financial reporting; manufacturing sector; corporate governance.
spellingShingle Lin Oktris
Agustin Fadjarenie
Apollo Daito
Zuha Rosufila Bt Abu Hasan
Environment Uncertainty, Earnings Volatility and Their Role in Financial Statement Fraud?
Jurnal Akuntansi
environmental uncertainty; earnings volatility; fraudulent financial reporting; manufacturing sector; corporate governance.
title Environment Uncertainty, Earnings Volatility and Their Role in Financial Statement Fraud?
title_full Environment Uncertainty, Earnings Volatility and Their Role in Financial Statement Fraud?
title_fullStr Environment Uncertainty, Earnings Volatility and Their Role in Financial Statement Fraud?
title_full_unstemmed Environment Uncertainty, Earnings Volatility and Their Role in Financial Statement Fraud?
title_short Environment Uncertainty, Earnings Volatility and Their Role in Financial Statement Fraud?
title_sort environment uncertainty earnings volatility and their role in financial statement fraud
topic environmental uncertainty; earnings volatility; fraudulent financial reporting; manufacturing sector; corporate governance.
url http://ecojoin.org/index.php/EJA/article/view/2441
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