New Fraud Diamond and Financial Statement Fraud: A Case Study in Emerging Country

This study investigates the effect of the New Fraud Diamond components, financial target, nature of industry, earnings growth, and change of directors on financial statement fraud among construction companies listed on the Indonesia Stock Exchange (IDX) during the period 2020–2023. Guided by the New Fraud Diamond framework and Agency Theory, the research employs a quantitative approach using logistic regression analysis on 80 firm-year observations. The results show that all four independent variables have a significant effect on the likelihood of financial statement fraud. Specifically, low profitability (financial target), low receivables turnover (nature of industry), high earnings growth, and the presence of director changes are all positively associated with fraudulent financial reporting. These findings confirm the applicability of the New Fraud Diamond model in emerging markets and highlight the importance of identifying fraud risk factors for early detection. The study contributes to the literature by offering empirical evidence on the role of pressure, opportunity, integrity, and capability in shaping corporate fraud behavior within the Indonesian construction sector.