The relationship between politics, legal system and financial reporting on fraud

Kishore Singh, Pran Boolaky, Kamil Omoteso
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Abstract

Motivation: Fraud is a challenging problem. Its economic effects are clear – worse public services, less financially stable and profitable companies, charities deprived of resources needed for charitable purposes and diminished levels of disposable income of everyone. In every sector globally, fraud has an adverse impact on the quality of life. Fraud threatens the effective and efficient utilization of resources and hence is of great concern to industries, the whole community and academia. Research Question: Does political regime moderate the relationship between financial reporting regime and on fraud? Does the legal system moderate the relationship between financial reporting regime and on fraud? What is the impact of financial reporting regime, legal regime and political regime on fraud at national level? Idea: This study investigates how political, legal and financial reporting impacts on fraud at a country level and whether any triangular effects exist. Data: Country level data published by ACFE, World Fact book, Deloitte IAS Plus Report, IFAC Report and Economic Intelligence Unit Report on Democracy Index for 106 countries for the years 2010 to 2014 was used. Tools: To test study’s hypotheses and to determine the interactive effects of legal regime, political regime and financial reporting regime on fraud, a three-way ANOVA is used. To determine the impact of the independent variables on fraud, pooled regression analysis is used. Findings: The findings provide both theoretical and empirical evidence on the interaction effects of political, legal and financial reporting regimes on fraud. Political and legal regime has a significant interaction with financial reporting on fraud as posited by political accountability theory and legal theory. Even the main effects of each regime separately are statistically significant. Contribution: given the complex nature of frauds, the study is relevant to regulators, practising auditors, legal and political experts and politicians engaged in the debate on frauds and how to address this harmful act at a cross country level. When collusion exists between executive, legislative oversight in a full democratic regime is weakened, impacting the mechanism of fraud minimisation.
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政治、法律制度与财务报告舞弊的关系
动机:欺诈是一个具有挑战性的问题。它对经济的影响是显而易见的——公共服务更差,财务更不稳定和盈利的公司,慈善机构被剥夺了用于慈善目的所需的资源,每个人的可支配收入水平都下降了。在全球的每一个部门,欺诈都对生活质量产生不利影响。欺诈威胁到资源的有效和高效利用,因此受到工业界、整个社会和学术界的高度关注。研究问题:政治制度是否调节财务报告制度与欺诈之间的关系?法律制度是否调节了财务报告制度与欺诈之间的关系?财务报告制度、法律制度和政治制度对国家层面欺诈的影响是什么?想法:本研究调查了政治、法律和财务报告如何影响国家层面的欺诈行为,以及是否存在任何三角效应。数据:采用ACFE发布的2010年至2014年106个国家的国别数据、《世界概况》、德勤国际会计准则增刊报告、国际会计师联合会报告和经济智库民主指数报告。工具:为了检验研究的假设,并确定法律制度、政治制度和财务报告制度对欺诈的互动影响,使用了三向方差分析。为了确定自变量对欺诈的影响,使用了混合回归分析。研究结果:研究结果为政治、法律和财务报告制度对欺诈的相互作用提供了理论和实证证据。政治和法律制度与政治问责理论和法律理论假设的财务报告欺诈有重要的相互作用。甚至每一种疗法的主要效果在统计上都是显著的。贡献:鉴于欺诈的复杂性,该研究与参与欺诈辩论以及如何在跨国层面解决这种有害行为的监管机构、执业审计师、法律和政治专家以及政治家相关。当行政部门之间存在勾结时,完全民主制度下的立法监督就会被削弱,从而影响最小化欺诈的机制。
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