Fraud Hexagon and Fraudulent Financial Reporting in ASEAN Islamic Banks: Evidence from Indonesia, Malaysia, Brunei Darussalam, and the Philippines

Nani Wahyuni; Taufik Akbar

doi:10.14414/tiar.v16i2.5658

Vol. 16 No. 2 (2026), Articles

Vol. 16 No. 2 (2026) Pages 209-228

Fraud Hexagon and Fraudulent Financial Reporting in ASEAN Islamic Banks: Evidence from Indonesia, Malaysia, Brunei Darussalam, and the Philippines

Nani Wahyuni⁺⁻
Taufik Akbar⁺⁻

Nani Wahyuni

Department of Accounting, Faculty of Economics and Business, Universitas Mercu Buana, Jakarta,, Indonesia

Taufik Akbar

Department of Accounting, Faculty of Economics and Business, Universitas Mercu Buana, Jakarta,, Indonesia

DOI: 10.14414/tiar.v16i2.5658

Published 2026-06-23

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Keywords

Fraud Hexagon
fraudulent financial reporting
Islamic banks

How to Cite

Wahyuni, N., & Akbar, T. (2026). Fraud Hexagon and Fraudulent Financial Reporting in ASEAN Islamic Banks: Evidence from Indonesia, Malaysia, Brunei Darussalam, and the Philippines. The Indonesian Accounting Review, 16(2), 209-228. https://doi.org/10.14414/tiar.v16i2.5658

Abstract

Fraudulent financial reporting in Islamic banks remains an important concern because Sharia compliance does not automatically eliminate governance weaknesses and managerial opportunism. However, empirical evidence on the determinants of fraudulent financial reporting in ASEAN Islamic banks using the Fraud Hexagon framework remains limited. This study aimed to examine the effect of the Fraud Hexagon factors on fraudulent financial reporting in Islamic banks across Indonesia, Malaysia, Brunei Darussalam, and the Philippines during 2020–2024. Using a quantitative explanatory design, this study analyzes 152 bank-year observations based on audited annual reports. Fraudulent financial reporting is proxied by the F-Score, while the independent variables consist of growth pressure, effective monitoring, related-party sales, CEO education background, CEO tenure, and corporate involvement in government projects. The data were analyzed using partial least squares–structural equation modeling (PLS-SEM). The results show that CEO tenure has a significant positive effect on fraudulent financial reporting (β = 0.330, p < 0.001), while effective monitoring also has a significant effect (β = 0.178, p = 0.021). The model explains 16.5% of the variation in the F-Score. These findings imply that Islamic banks should strengthen governance mechanisms, evaluate long executive tenure, and improve monitoring effectiveness to reduce fraudulent financial reporting risk.

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