Audit committee attributes and financial statement fraud risk: evidence from Indonesian banks

Fraud remains a challenge for various organizations. Financial statement fraud risk refers to fraud that has a substantial economic impact. This research empirically analyzes how audit committee attributes affect financial statement fraud risk (FSFR), focusing on four specific attributes: education level, gender, tenure and age. The analysis is carried out using an unbalanced annual panel data set for 89 banks and the period of 2009–2023. The data were analyzed using random-effects GLS regression. The analysis demonstrates that the presence of female audit committee members and higher educational levels among committee members decreases FSFR. Board age diversity is positively related to FSFR. Age diversity on the board diminishes members’ effectiveness in coordination and communication due to generational differences in communication styles, work preferences and decision-making approaches. Finally, the findings suggest that audit committee tenure does not significantly affect FSFR. The results remain robust after controlling for the majority ownership, audit committee size, total assets, directors’ ownership, board of director size, board of commissioner size and loan-to-asset ratio factors that may cause agency conflict.