The determinant factors of strategic fraud

Abstract

Fraud is a potential threat to every company, even more for a financial institution, hence, research on strategic fraud determinant factors in financing institutions, with its large market share and assets, becomes necessary. The objective of this study is to investigate the partial and simultaneous influence of compensation, internal control and organizational culture toward the fraud tendency. This study uses quantitative explorative methods. The samples are determined using proportionate stratified random sampling; the survey used questionnaire and IDI. The analysis uses SPSS with multiple regression test instrument, classical determinant tests, and individual tests. The population of this study involved all the 2,123 employees. The samples are taken using proportional random sampling through an incidental sampling of Slovin formula which accounted for 337 samples. The study reveals that: (a) Compensation (X1) has the most significant and negative influence toward the fraud tendency; (b) Internal Control (X2) has a positive but insignificant influence toward the fraud tendency; (c) Organizational Culture (X3) has a negative but insignificant influence toward the fraud tendency; (d) The success rate of curbing fraud tendency simultaneously can be predicted using the proposed regression formula; (e)Policy is needed to optimally curb the tendency of fraud by improving compensation, internal controls, and improving the organizational culture.