ANALYSING THE ORGANIZATIONAL PRESSURE AS MEDIATORS BETWEEN THE GOVERNMENT STABILITY AND FINANCIAL STATEMENT FRAUD: EVIDENCE FROM INDONESIA

Abstract

The prevention and mitigation of financial statement fraud have emerged as a critical concern that demands attention in order to enhance governmental performance. Consequently, this area necessitates the concentrated efforts of researchers. This article aims to analyse the influence of government stability on the inclination to adopt international accounting standards (IAS) and the impact of corporate governance pressure. Additionally, it investigates the effects of adopting IAS and corporate governance pressure on the occurrence of financial statement fraud in the context of Indonesia. This study also examines the mediating influence of pressure to adopt International Accounting Standards (IAS) and pressure of corporate governance on the relationship between government stability and financial statement fraud. The research collects data from government officials through the administration of surveys and subsequently employs smart-PLS to analyse the gathered data. The findings of the study suggest that the stability of the government has a favourable influence on the inclination to adopt International Accounting Standards (IAS) and the emphasis on corporate governance. Additionally, the results reveal that the inclination to adopt IAS and the emphasis on corporate governance have an adverse effect on the occurrence of financial statement fraud. The results also revealed that pressure to adopt IAS and pressure of corporate governance significantly mediate between government stability and financial statement fraud. The study guides the policymakers in developing policies related to reduce financial statement fraud by adopting IAS and corporate governance.