Do Not Judge a Book By Its Cover: The Influence of CEOS Masculinity and Religiosity on Financial Statement Fraud

Abstract

Research background: Indonesia continues to encounter significant challenges in eradicating fraud, particularly in the context of financial statement fraud. This study contributes to the literature by introducing a novel perspective on the determinants of fraudulent activities, focusing on biological and psychological factors. Purpose: This paper examines the influence of CEOs’ masculinity and religiosity on the likelihood of financial statement fraud. Research methodology: The study population consists of mining companies listed on the Indonesia Stock Exchange (IDX) between 2018 and 2022. Data analysis was conducted using STATA 17.0, and hypothesis testing employed the marginal effects of Logit regression. Results: The findings reveal that CEOs with pronounced masculine behavior are more likely to engage in accounting fraud. However, religiosity appears to attenuate this likelihood. Novelty: This study advances the field of accounting fraud and behavioral accounting research, by addressing gaps related to the biological and psychological characteristics associated with fraudulent financial reporting. Furthermore, the findings provide practical implications for both companies and investors, emphasizing the importance of considering individual behavior as well as religiosity when appointing CEOs or making investment decisions.