Evaluating the role of the business environment on the possibility of financial statements fraud of listed companies of stock exchange
Subject Areas :Ali Amiri 1 , Mehdi Rad 2 , Mohammad Hussein Ranjar 3 , Hojjatallah Salari 4
1 - Department of Accounting, Bandar. Bandar Abbas Branch. Islamic Azad University. Bandar Abbas. Iran
2 - Accounting Department, Bandar Abbas Branch, Islamic Azad University, Bandar Abbas, Iran.
3 - Management Department, Bandar Abbas Branch, Islamic Azad University, Bandar Abbas, Iran
4 - Accounting Department, Bandar Abbas Branch, Islamic Azad University, Bandar Abbas, Iran
Keywords: business environment, financial statement fraud, logistic regression, exchange rate, per capita income.,
Abstract :
Financial statement information disclosed by companies is the main source of information for making investment decisions. Therefore, in this study, the role of the business environment on the possibility of fraud in the financial statements of 120 companies admitted to the stock exchange during the years 2017-2018 was investigated using the logistic regression approach. For this purpose, the effect of 31 variables on the possibility of financial statement fraud was investigated, of which 9 variables were related to the business environment and the rest were related to the corporate level. The results showed that the estimated logit model explains about 26% of the changes in the ratio of the probability of fraud in financial reports to its non-occurrence. Two variables of per capita income and free market exchange rate among the nine variables of the business climate have a significant effect on the possibility of fraud in the financial report of companies, and with a one percent increase in the per capita income, the probability of financial statement fraud decreases by 52 percent and with An increase in the exchange rate in the free market also increases the probability of fraud in the financial reports of the investigated companies by 43%. The results of the research show the importance of business environment variables along with company level variables in predicting the possibility of fraudulent financial statements of companies.
