Testing Factors is Used to See the Effect on the Fraudulent Financial Reporting in the perspective Fraud Pentagon Theory

This research aims to analyze the factors that encourage fraudulent financial reporting in the perspective of a fraud pentagon theory. This research analyze the influence of variables pressure which proxied by using financial targets and financial stability, the opportunities which proxied by ineffective monitoring and the turnover on the leader of the internal auditor, the rationalization which proxied by the change of external auditors, the ability which proxied by the change of directors, and the arrogance which proxied by the frequent number of CEO`s picture displayed in the annual report to fraudulent financial reporting as measured by the fraud score model. This research uses a quantitative method with a descriptive research type. The populations of this research are the company's sector of property sector, real estate, and building construction company listed on the Indonesian Stock Exchange from the 2016-2018 periods. The total sample of this research is 53 companies. The sampling technique used is a purposive. The data analysis used is using multiple linear regression analysis methods with SPSS 25 software. Based on the multiple regression analyses, the results show that variable financial target, variable financial stability, and the change of external auditors are having a significant effect on fraudulent financial reporting. Meanwhile, variable ineffective monitoring, turnover on the leader of internal auditor, change of directors, and the frequent number of CEO`s picture displayed in the annual report have no significant effect on fraudulent financial reporting. Keywords—Fraud, fraud pentagon, fraudulent financial reporting