A financial perspective of fraud triangle
Author:
Ioan-Bogdan ROBU, Ph. D.
JEL:
C38, C58, K42, M42
DOI:
Keywords:
fraud triangle, fraud dimensions, financial ratios, principal component analysis, logistic regression analysis
Abstract:
Since the beginning of its first appearance, and more prominent in the context of major financial scandals, financial fraud has attracted the attention and it has aroused interest for identifying the main determinist factors. According to the opinions of researchers and practitioners in the field, knowing the factors had the role of adoption and implementation of effective mechanisms for prevention and detection. Although, the current literature suggests several key factors, synthesized as a fraud triangle, the main problem of this approach is the psychological orientation of this deadly phenomenon (fraud) and less to the financial side. This study aims to identify the main financial components of fraud to obtain functions for determining the likelihood of fraud, from a series of well-known economic and financial indicators, using advanced statistical methods of data analysis. The objectives of research and validation of working hypotheses were achieved based on the study of a sample of 65 frauded and un-frauded companies, listed on major financial markets worldwide. To obtain research results, data were processed with SPSS 19.0.\r\n