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International Journal of Economic Perspectives, 2016, Volume 10, Issue 1, 138-150.

Dividend Policy, Information Technology, Accounting Reporting to


Investor Reaction And Fraud Prevention

Tulus SURYANTO
Lecturer Faculty of Islamic Economic and Business; The State Islamic Institute of
Raden Intan Lampung- Indonesia; Email: tulus@iainradenintan.ac.id.

ABSTRACT

The purpose of this research is to examine the impact of dividend policy, information technology, accounting
reporting toward fraud prevention in companies that listed on Indonesia Stock Exchange. Besides, this research
aims to examine if investor reaction behaves as moderator. The population of the study is composed of
manufacturing companies registered in the Indonesia Stock Exchange. Sampling technique employed in this
study is the cluster random sampling with a total sample of 73 companies. The data analysis has been done in
SPSS. The results of the study show that the dividend policy, information technology, and accounting reporting
have significant influence on fraud prevention. The other results showed that investor reaction behaves as
moderator among dividend policy, accounting reporting to fraud prevention; however, investor reaction does not
have a moderation role betwwen information technology and fraud prevention.

JEL Classifications: M10; M14.

Keywords: Dividend Policy; Information Technology; Accounting Reporting; Fraud Prevention; Investor
Reaction.

1. INTRODUCTION

In the process of making investment decisions, investors tend to invest in companies with a concern for social
issues and the environment (Pinnarwan in Zuhroh and Sukmawati, 2003). The companies that are more revealing
social information needed by investors will certainly gain the trust of the public. With increasing public trust in a
company that does the disclosure is expected to be the driver of the increase in the volume of stock trading and
stock returns in companies that are considered as the driving force for the reaction of investors in making
investment decisions. To attract investors to invest in, the companies have to work hard so that they are
presenting the report free of misstatements and irregularities or fraud. According to SAS no. 99, there are four
types of pressure that may lead to fraud in the financial statements: (1) financial stability, (2) external pressure,
(3) personal financial need, and (4) financial targets.

Financial statement fraud often begins with misstatements or management-quarter earnings from financial
statements that are considered not material but eventually grew into massive fraud and produce annual financial
statements materially misleading (Rezaee, 2002). Cheating on the financial statements will result in
misperceptions by auditors and other users of financial statements because it does not show the actual condition
of the company. This will bring the impact of losses for businesses. One way you can do the management
company to prevent fraud is to focus on dividend policy. A company's dividend policy has important
implications for many parties involved in the community, because the dividend policy is a decision whether the
profits they make the company will be distributed to shareholders as dividends or be detained in the form of
retained earnings in order to finance an investment in the future (Agus, 2001 ) dividend policy is an indicator of
earnings quality companies, with the dividend policy will be an impact on corporate profits in the financial
statements. Their dividend policy taken by the management company to manage their finances in particular, will
help reduce the occurrence of fraud in earnings manipulation.

Information technology launched to assist companies in carrying out day-to-day operations. Implementation of
information technology in the company making the performance increase. With systematic information
technology and will further narrow the gap integrated fraud within the company. In addition to information
technology, another factor that is not less important in the prevention of fraud is accounting reporting.
Accounting reporting is an essential component to create organizational accountability. Greater demands on the
implementation of public accountability implications for management to provide information to the public, one
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of which is the accounting information in the form of financial statements. The challenge facing accounting
reporting is mampukah accounting provide information that can be used to monitor the management
accountability, political accountability, and accountability policies. One form of fraud prevention is to present a
true accounting reporting by considering the implementation of policies, systems and procedures to help assure
that necessary action has been carried commissioners, as well as manajernen and other personnel to be able to
provide the assurance of adequate. This study tries to examine the effect of the dividend policy, the application
of information technology, accounting and reporting for fraud prevention investigate whether the reaction of
investors as a moderating influence variable dividend policy, the application of information technology
accounting reporting on fraud prevention.

2. LITERATURE REVIEW

2.1 Dividend policy

Dividend is the value of the company's net income after deducting tax earnings (retained earnings) is being held
as a reserve company. According Mamduh (2004), the dividend is the compensation received by the
shareholders, in addition to capital gains. Investors will be happy if part of net profit will be distributed as
dividend increases. Thus the dividend decision will refer to an optimal dividend policy, especially adapted to the
concept of the objective of maximizing the value of the company. Dividend policy (DPS) regarding the decision
to split the profit or hold it to be invested into the company. If the company has a policy to distribute additional
cash dividend, then it is likely to increase compared with the number of shares outstanding. The company
assortment, Patience (2004) mentions, among others, namely:

1. A stable dividend policy, in this case the amount of dividends paid per share each year are relatively stable
over a certain period.
2. The dividend policy with the establishment of minimum dividends on a regular basis plus certain extras. In
this case the shareholders receive dividends on a regular basis with a minimal amount of dollars alone.
3. The dividend policy with a fixed percentage amount (dividend payout ratio), means dividends paid to
shareholders in proportion fluctuates with the fluctuation rate of profit.
4. The residual dividend policy, in this policy the company prefers the use of profit for investment opportunities
that the new dividend will be paid if the income exceeds the available funding needs for optimal investment.

2.2. Information Technology

Information technology has become the primary choice in creating an organization's information systems are
resilient and able to bring a competitive advantage in the increasingly fierce competition ini.Investasi adults in
information technology within an organization generally intended to contribute to the performance of individual
members of organizations and institutions. In addition, the use of information technology will also facilitate and
accelerate the activities of the organization. Thus, the employees can perform their duties economically,
efficiently and effectively. According to O'Brien (2006) technology is a computer network consisting of a wide
range of information processing components that use different types of hardware, software, data management
and information network technology. According to Aji (2005) information is processed and its data into other
useful data and information commonly called. Utilization of information technology also gives a lot for non-
governmental institutions. Mahmood and Mann (1993) states that the steady investment in information
technology should be considered to improve the economic performance and strategy of the organization. By
investing in the right IT company will, have a competitive advantage that will be able to compete within the
company and success in the competition will be able to improve the performance of the company in the form of
the firm's output, efficiency, efektivitivitas, strengths and weaknesses of the company, and the value of the
company as indicated by the value stock company.

Utilization of information technology, according to Thomson et al. (1991) in Tjhai (2003) are the benefits
expected by users of information systems in performing their duties or behavior in the use of technology at the
time of doing the job. The measurement is based on the intensity of use, frequency of use, and the number of
applications or software used. Appropriate use of information technology and backed by the expertise of
personnel who operate it can improve the performance of the company and the performance of the individual
concerned. The role of IT in various aspects of business activities can be understood because as a technology that
focuses on setting up information systems with the use of computers, IT can meet the information needs of the
business world very quickly, timely, relevant, and accurate (Wilkinson and Cerullo, 1997).
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2.3 Accounting Reporting

The financial statements is a form of accountability for the stewardship of economic resources owned by an
entity (Deddi Nordiawan, 2007). As revealed also by Kieso, Weygant (2005) that, report that measures the
success of enterprise operations for a given period of time. Meanwhile, according to Government Regulation No.
24 of 2005, Financial Statement is structured reports regarding the financial position and transactions undertaken
by a reporting entity. Financial statement presentation purposes, according to Jones (2000) is "To provide (1)
financial information usefull for making economic and (2) information usefull for evaluating managerial and
organizational performance". While Wolk (2001) states that: "An objective of financial statements for
govermental and not-for-profit Organizations is to provide information useful for evaluating the effectiveness of
the management of resources in Achieving the organization's goals. In SFAS No. 45 "Nonprofit Financial
Reporting" suggests the main objective of financial statements is to provide the relevant information to meet the
interests of the contributors, the organization's members, creditors and other parties that provide resources for the
activities of non-profit organizations.

2.4 Fraud

In the English-Indonesian dictionary (Echols, 1989), fraud means (1) fraud, (2) an Impostor, (3) cheating, (4)
embezzlement. Jones and Bates (Jones, 1990) in the Public Sector Auditing claimed fraud in thef Act 1968 is
darkening that includes a variety of fraud, among other intentional fraud, falsification of accounts, evil practices,
embezzlement or theft, corruption and so on. Fraud occurs where a person obtains property or financial gain
through fraud or deception. Such cheating indicate the intentional, excluding ignorance. Meanwhile, according to
Jones (Jones, 1993), fraud is an intentional errors, which are grouped into two types, namely: (1) fraudulent
financial reporting, which include: manipulation, falsification, or alteration of accounting records or supporting
documents and financial statements prepared, not present in or deliberately omit events, transactions, and
important information and financial statements, and intentionally apply the incorrect accounting principles, (2)
missapropriation of assets, which include cash receipts embezzlement, theft of assets, and the things that cause
an entity to pay for goods or services not received.

2.5 Investor reaction

Investors are individuals, groups or legal entities investing in a specific business unit. The reaction of investors
indicated by a particular company's stock price changes are quite striking from a securities concerned at the time
of the earnings announcement. Which is striking is that there is a considerable difference between the returns
that occur (the actual return) with the return expectations of expected return. Investor reaction (the market) is
indicated by a change in the stock price (stock return) striking a particular company at the time of the earnings
announcement that there are considerable differences between the returns that occur with return expectations
(Suwardjono, 2005).

2.6 Hypothesis Development

2.6.1 Dividend policy effect on fraud prevention

Dividend policy is an indicator of earnings quality companies, with the dividend policy will be an impact on
corporate profits in the financial statements. Their dividend policy taken by the management company to manage
their finances in particular, will help reduce the occurrence of fraud in earnings manipulation. Casey and Hanlon
(2005), using a sample of 32 companies that ituduh commit fraud by the SEC's financial reporting, test
correlation dividends and earnings quality. They found that companies that commit fraud are rarely (not) pay
dividends and raise the size of the dividend compared to companies who do not commit fraud. Easterbrook
(1984) states that the company is manipulating its earnings are likely to share or raise dividends more frequently
than companies that are not involved in the manipulation of earnings. Profits from earnings manipulation does
not have a cash basis and not sustainable. Therefore, managers tend not to share or not to raise the dividend even
though no increase in profit, because profit is thus unsustainable (Lintner, 1956). Glassman (2005) states that the
payment of the dividend would cause the company to report earnings engineered cenderungtidak that does not
produce actual cash flows for dividend payments. Based on the above explanation, the proposed hypothesis is as
follows:

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H1: Dividend policy exerts effects on fraud prevention

2.6.2 Information technology influence on fraud prevention

Information technology has brought fundamental changes to the organization, both private and public
organizations. Therefore, information technology becomes a very important thing in determining the
competitiveness and the ability of companies to improve business performance in the future. Information
technology resources into a consideration both for managers and consultants, in determining the success of the
company in the future (Devaraj and Kohli, 2003) .Implementasi information technology can meet the
information needs of the business world very quickly, timely, relevant, and accurate (Wilkinson and Cerullo,
1997). Their implementation of information technology that helps enterprise IT activity in generating accurate
information would greatly help prevent fraud in the organization of the company. Under these conditions, put
forward the hypothesis as follows:

H2: Information Technology exerts influence on fraud prevention

2.6.3 Reporting Accounting effect on fraud prevention

Accounting reporting is an essential component to create organizational accountability. One form pencegahah
accounting fraud is to present the actual reporting by considering the implementation of policies, systems and
procedures to help assure that necessary action has been carried commissioners, as well as manajernen and other
personnel to be able to provide the assurance of adequate. Research conducted by Santoso (2008) proved that the
application of the accounting report in the public sector proved to prevent fraud. Based on the above explanation,
the proposed hypothesis is as follows:

H3: Accounting reporting effect on fraud prevention

Investor reaction moderates the influence of dividend policy, the application of information technology and
accounting reporting on fraud prevention. Their maximum effort on the part of companies to prevent fraud
would bring positive effects in the eyes of investors. Attempts by the company such as the application of
dividend policy, information technology applications and presenting accounting reporting is expected to attract
investors to invest in the company. Investors can look at the performance of the company based on information
from the financial statements presented by the company. Of these financial statements the company implied that
the work done day-to-day operations they are free from elements of fraud. Policy set by the company, recording
techniques were done can be seen from the information presented by the company through its financial
statements. Research conducted by Wibowo et al (2009) showed that the application of the fraud warning system
by the method of whistle blowing system provides benefits for the organization as a container for information
about internal party companies to disclose, report the fraud that occurred. Firms that have been doing early
prevention of fraud positive reactions in the eyes of investors. Investors assess that the company has
implemented fraud yange warning system in their organization, suggesting that the company has sought the
maximum in managing the organization to improve organizational performance (Reinsten, Husband, Bayau
1999) in Wibowo (2009). Based on the above explanation, the proposed hypothesis is as follows:

H4: The reaction of investors to moderate the influence of dividend policy on fraud prevention
H5: The reaction of investors to moderate the influence of information technology applications to the prevention
of fraud
H6: The reaction of investors to moderate the effect of accounting reporting on fraud prevention.

3. METHODS

3.1 Population and Sample

The population in this study are all companies listed or listing on the Indonesian Stock Exchange (BEI) during
2014.

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Figure 1. Model Research Framework


Research Model

Investor
Reaction
- Dividend Policy
-Application T I
fraud
-Accounting reporting prevention

3.2 Sampling techniques

The sample in this study were selected by random cluster sampling method, the sample was obtained from each
cluster were chosen at random (have now, 2006).

3.3 Testing for Data Quality and Results

According to Hair et al (1995) the quality of the data produced from the use of the instrument can be evaluated
through tests of reliability and validity. The test each one to determine the consistency and accuracy of data
collected from the use of the instrument. There are two procedures were performed to measure the reliability and
validity of data, namely: internal consistency test of the respondents on research instruments and test construct
validity by way of correlating between the scores of each item and the total score. Description of the test quality
of the data is as follows:

1. Test the internal consistency (reliability) was determined by Cronbach alpha coefficient. A construct or
instrument said to be reliable if it gives Cronbach alpha values above 0.60 (Nunnally, 1967 in Imam, 2005).
2. Test homogeneity of data (validity) with a correlation test person. If the result is significant then the data is
said to be valid.

3.3.1 Normality Test

Normality test aims to test whether the regression model, or residual confounding variables have a normal
distribution. As it is known that the t test and F assumes that the value of the residuals follow a normal
distribution. If this assumption is violated then becomes invalid statistical test for small sample size. One
statistical test that can be used to test the residual normality is a non-parametric statistical tests Kolmogorov-
Smirnov (KS).

3.3.2 Tests of Classical Assumptions

In connection with the use of multiple regression analysis (multiple regression) it is necessary to test classic
assumptions contained in the multiple regression as follows:

3.3.2.1 Test for Multicoloniarity

Multicoloniarity test aims to test whether there is a correlation between the independent variables in the
regression model (Priest, 2002). This test can see the amount of VIF and tolerance. Guidelines used for a
regression model that is free multicoloniarity is VIF all independent variables under the value of 10 and a
tolerance value above 0.1 (Hair, 1998).

3.3.2.2 Test for Autocorrelation

The aim of autocorrelation test is to test whether the linear regression model there is a correlation between
bullies error in period t with an error in period t-1 (previous) (Priest, 2002). This test is done by looking at the
Durbin Watson:

1) if d <dl or d> (4-dL) then there is autocorrelation.

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2) if d lies between dU and (4-dU) then there is no autocorrelation.


3) if d lies between dL and dU or between (4-dU) and (4-dL) it does not produce definitive conclusions.

3.3.2.3 Test for Heteroskedasticity

Heteroskedasticity test was conducted to test whether the regression model occurred inequality variant of the
residuals of the observations to other observations. If a variant of another observation residual remains, then
called homoscedasticity. A good regression model was homoscedasticity or not happen heterokedasticity (Priest,
2002). Detection of the presence or absence heterokedastisitas done by looking at the presence or absence of a
particular pattern (wavy, widened and then narrowed) on the graph plots (scatterplot) between the predictive
value of the variables associated with the residual.

3.4 Hypothesis Testing

The statistical analysis used was simple and multiple regression analysis as a model that predicts the causal
relationship between the dependent variable with several independent variables. Simple linear regression to
examine the relationship between dividend policy, the application of information technology, accounting
reporting to the prevention of fraud and examine the relationship moderating variable (investor reaction) with
fraud prevention. Moderated regression analysis (MRA) is used to determine the interaction between the three
variables by one variable as moderating variable (Nunnally, 1994).

4. RESULTS AND DISCUSSION

4.1 Variable Description

An overview of research variables are dividend policy, information technology, accounting reports, fraud and
investor reactions are presented in the table of descriptive statistics which show the range of theoretical and
actual figures, the average standard deviation can be seen in Table 1. If the average value in the range of answers
to each construct actually below average in the range of theoretical, it means that the influence of the variables
studied the respondents tend to be low. And vice versa if the average value of the range actually above average
theoretical range, then the effect of the studied variables on respondents tend to be high.

Table 1: Descriptive statistics Variable Research


Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Statistic Statistic Statistic Statistic Std. Error Statistic
KB 73 11.511 20.00 15.232 .112 1.256
TI 73 12,331 22.841 17.234 .897 12.349
AC 73 11.445 23.063 18.890 .145 13.543
FR 73 13.442 23.982 16.812 .467 13.990
RI 73 11.256 20.891 16.213 .234 12.232
Valid N (listwise) 73

Based on the above table it can be seen that the dividend policy (KB) has a minimum value of 11.511, the
maximum value of 20.00, an average of 15.232, and the standard deviation of 1, 256. The standard deviation
value which is smaller than the dividend policy of the average value indicates that the value of the dividend
policy between the respective companies are not too far away. Variable information technology (TI) has a
minimum value 12.331, 22.841 maximum value, the average value of the standard deviation of 17.234 and
12.349. Standard deviation value which is smaller than the average value indicates the difference between the
use of information technology companies are small. Positive values indicate that mean that the average company
surveyed using information technology in its operations.

Accounting reporting variable (AC) has a minimum value of 11,445, the maximum value of 23.063, an average
value of $ 18,890, and the standard deviation of 13.543. Standard deviation value which is smaller than the
average value indicates the difference between the accounting reporting companies is small. Positive values
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indicate that mean that the average company surveyed Accouting activity report. Variable fraud (FR) has a
minimum value of 13.442, 23.982 maximum value, the average value of the standard deviation of 16.812 and
13.990. Standard deviation value which is smaller than the average value indicates differences in the amount of
inter-company fraud prevention is small. Variable investor reaction (RI) has a minimum value 11, 256, the
maximum value of 20, 891, the average value of 16,213, and a standard deviation of 12, 232. Values smaller
standard deviation from the average value indicates the difference between the companies is investor reactions
little would mean there was no difference in reaction i invetor too much for each company.

4.2 Test for Data Quality

Results of testing the reliability and validity of the data show the level of consistency and accuracy is quite good.
On test reliability, internal consistency coefficient Cronbach's Alpha coefficients showed no less than the
minimum limit of 0.60 (Nunnally, 1967 in Imam, 2005). While on testing the validity of the homogeneity test
data and test correlation between the scores of each item with the total score (Pearson Correlation) showed a
positive correlation and significant level at 0.01 level. Reliability and validity of test results are presented in
Table 2 and Table 3 below.

Table 2: Reliability Test Results

Cronbach
No Variable Alpha Value Information

1 Dividend Policy 0,674 Reliable

2 Application information teknlogi 0,683 Reliable

3 Accounting Reporting 0,637 Reliable

4 prevention of fraud 0,807 Reliable

5 investor reaction 0,761 Reliable

Source: primary data processed.

Table 3: Validity of Test Results


Range
No Correlations Significant Information
1 Variable 0,336**-0,689** 0,001 Valid

2 Dividend Policy 0,391**-0,781** 0,001 Valid

3 Application information teknlogi 0,260**-0,820** 0,001 Valid

4 Accounting Reporting 0,387**-0,808** 0,001 Valid

5 prevention of fraud 0,221**-0,708** 0,001 Valid

Source: primary data processed

4.3 Normality Test

Here's a test to see if the data has normality of results using the program SPSS:
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Table 4: Normality Test Results


One-Sample Kolmogorov-Smirnov Test
Unstandardized
Residual
N 73
Normal Parametersa,,b Mean .0000000
Std. Deviation 4.14523562
Most Extreme Differences Absolute .234
Positive .023
Negative -.234
Kolmogorov-Smirnov Z .552
Asymp. Sig. (2-tailed) .578
a. Test distribution is Normal.
b. Calculated from data.

Based on the above output hasi, otherwise variable spread with normal test results Kolmogorov Smirnov
standarized residuals indicate if the value assympatic significant (two-tailed)> alpha (0.05). In Table, it is known
that the Kolmogorov-Smirnov test sebesar0,552 while asymp value. sig. (2-tailed) for unstandardized variable of
0.578 greater than a value of 0.05, so it can be concluded that the data used in normal distribution.

4.4 Tests of Classical Assumptions

4.4.1 Test for Multicollinearity


as
Coefficient
Unstandardized Standardized
Coefficients Coefficients Collinearity Statistics
Model B Std. Error Beta t Sig. Tolerance VIF
1 (Constant) 12.367 2.909 4.251 .000
KB .756 .062 .756 12.188 .000 .984 1.016
TI .020 .072 .018 .281 .779 .965 1.036
AR -.042 .040 -.067 -1.064 .289 .959 1.043
RI .018 .328 .003 .054 .957 .977 1.024
a. Dependent Variable: FR

Tolerance value calculation results also showed no independent variable has a value of Tolerance is less than
0.10, which means there is no correlation between the independent variable whose value is> 95%. Results of
calculation Variance Inflation Factor (VIF) also showed the same thing that no one independent variable which
has a value of VIF> 10. so it can be said that there is no multicoloniarity between independent variables in the
regression model.

4.4.2 Test for Autocorrelation

Based on the calculation results show that the value of Durbin Watson (DW) of 1.827, this value is compared to
the value of the table using the value of significance of 5%, the number of samples 100 (the number of samples
120 for less than 125 is closer to 100) and the number of independent variables 4 (k = 4) the obtained value of
1.592 dL and dU at 1.758. So we can say that DW 1.827 greater than the upper limit (dU) 1,758 and less than 4
to 1.592 (4- dU), so it can be interpreted that there is no positive or negative autocorrelation.

4.4.3 Test for Heteroscedasticity

Based on the calculation results indicate that the coefficient for the independent variable parameter no
significant, it means that there is no heteroscedasticity in the regression model

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Model Summaryb

Adjusted Std. Error of Durbin-


Model R R Square R Square the Estimate Watson
1 .751 a .565 .549 2.332 1.827
a. Predictors: (Constant), KB,TI,AR,FR
b. Dependent Variable: FR

Coefficients a

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 2.810 2.743 1.024 .308
KB -.075 .059 -.118 -1.281 .203
TI .041 .068 .057 .609 .544
AR -.037 .038 -.092 -.980 .329
RI .346 .309 .104 1.118 .266
a. Dependent Variable: LNDRTRES

4.5 Hypothesis Testing

Here's the view of the results of hypothesis testing in Tables 6 and 7:

Table 6: Summary of Results of Testing Hypotheses


Adjusted Significance test Significance test
simultaneous parameter
Hypothesis R Square individual Information

F Sig t Sig
H1
KB – FR 0,556 - - 4,968 0,000 take effect
H2 take effect
TI – FR 0,661 - - 3,332 0,000
H3 take effect
AR – FR 0,858 - - 4,960 0,000
H4
KB,RI, MDKBRI –FR 0,558 51,012 0,000 take effect
KB 0,735 0,023 take effect
RI - 1,206 0,001 take effect
MDKBRI 1,116 0012 take effect
H5
TI,RI,MDTIRI-FR 0,552 49,869 0,000 take effect
TI 4,782 0,000 take effect
RI 0,896 0,372 no Effect
MDTIRI -0,908 0,366 no Effect
H6
AR,RI, MDKBRI –FR 0,558 51,012 0,000 take effect
AR 0,735 0,064 take effect
RI - 1,206 0,030 take effect
MDARRI 1,116 0,017 take effect

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Table 7: Hypothesis Testing Results


Informatio
Hypothesis
n
H1 Dividend policy effect on fraud prevention Accepted

H2 Application of information technology influence on fraud prevention Accepted

H3 Accounting reporting effect on fraud policy Accepted

H4 Investor reaction to moderate the application of technology to the prevention of fraud Accepted

H5 Investor reaction to moderate the influence of dividend policy on fraud prevention Rejected

H6 Investor reaction to moderate the effect of accounting reporting on fraud prevention Accepted
Source: primary data processed

4.6 Discussion

4.6.1 Dividend Policy effect on fraud prevention

Dividend policy is an indicator of earnings quality companies, with the dividend policy will be an impact on
corporate profits in the financial statements. Their dividend policy taken by the management company to manage
their finances in particular, will help reduces the occurrence of fraud in earnings manipulation. This study
supports the research conducted by Casey and Hanlon (2005) who found that companies that commit fraud are
rarely (not) pay dividends and raise the size of the dividend compared to companies who do not commit fraud.

4.6.2 Information technology influence on fraud prevention

These results indicate that the implementation of information technology that helps enterprise IT activity in
generating accurate information impacting greatly help prevent fraud (fraud) within enterprise organizations. The
results are consistent with the proposed statement olehWilkinson and Cerullo (1997) who said that the
implementation of information technology to meet the information needs of the business world very quickly,
timely, relevant, and accurate so as to minimize errors whether intentional or not.

4.6.3 Accounting Reporting influence on fraud prevention

Accounting reporting is an essential component to create organizational accountability. One form of fraud
prevention is to present a true accounting reporting by considering the implementation of policies, systems and
procedures to help assure that necessary action has been carried commissioners, as well as manajernen and other
personnel to be able to provide the assurance of adequate. The results support the research conducted by Santoso
(2008), which proved that the application of the accounting report in the public sector proved to prevent fraud.

4.6.3.1 Investor reaction to moderate the influence of dividend policy on fraud prevention

From the test results analysis moderated known that investor reaction proved to moderate the influence of
diveden policy towards fraud prevention. Their dividend policy applied by the company in preventing fraud
directly and indirectly affected investor reaction. Dividend policy taken by the company as a form of prevention
of fraud is considered capable of triggering the reaction of investors to decide the making of investments and an
assessment of the company. Results of this study indirectly supports the research carried out by Hidayatullah et
al (2012), where the research proves that the ROA, the policy is the trigger divedendan stock returns directly to
the reaction of investors.

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4.6.3.2 Investors reaction are not proven moderate the influence of information technology on fraud prevention .

For hypothesis to 5 who say that the reaction of investors to moderate the effect of information technology on the
prevention of fraud is not proven. This result is due to the reality on the ground, investors are more likely to pay
attention to the performance of the company as a whole from the published financial statements and did not
examine the technology used in the company's financial reporting process their produce.

4.6.3.3 Investor reaction proved to moderate the effect of accounting reporting on fraud prevention

Hypothesis to 6 which says that the reaction of investors to moderate influence on the prevention of fraud
accounting reporting is received. Accounting reporting is the dominant variable is considered investors in view
of the performance of the company and decide to invest or not. These results support previous studies (Wibowo,
2009) and Reinsren et al (1991), which proved that the implementation of fraud warning system gives a positive
reaction in the eyes of investors. Investors assess that the company has implemented a fraud warning yange the
present accounting system that is transparent and accountable reporting is one of the real form of prevention of
fraud, it also indicates that the company has been trying to leverage in managing the organization to improve
organizational performance.

5. CONCLUSIONS

The conclusion of this study are as follows:

1. Dividend policy proven effect on the prevention of fraud. This study supports the research conducted by
Casey and Hanlon (2005) who found that companies that commit fraud are rarely (not) pay dividends and raise
the size of the dividend compared to companies who do not commit fraud.

2. Information technology proven effect on the prevention of fraud. the implementation of information
technology that helps enterprise IT activity in generating accurate information impacting greatly help prevent
fraud (fraud) within enterprise organizations. The results are consistent with the statement proposed by
Wilkinson and Cerullo (1997) who said that the implementation of information technology to meet the
information needs of the business world very quickly, timely, relevant, and accurate so as to minimize errors
whether intentional or not.

3. Accounting reporting proven effect on investor reaction. The results support the research conducted by
Santoso (2008), which proved that the application of the accounting report in the public sector proved to prevent
fraud.

4. The reaction of investors proved moderating influence diveden policy towards fraud prevention. Their
dividend policy applied by the company in preventing fraud directly and indirectly affected investor reaction.
Results of this study indirectly supports the research carried out by Hidayatullah et al (2012), where the research
proves that the ROA, diveden policy and stock returns is a direct trigger of the reaction of investors.

5. The reaction of investors has not been proven to moderate the influence of information technology to the
prevention of fraud. This result is due to the reality on the ground, investors are more likely to pay attention to
the performance of the company as a whole from the published financial statements and did not examine the
technology used in the company's financial reporting process their produce.

6. The reaction of investors proved to moderate the effect of accounting reporting to the prevention of fraud.
These results support previous studies (Wibowo, 2009) and Reinsren et al (1991), which proved that the
implementation of fraud warning system gives a positive reaction in the eyes of investors. Investors assess that
the company has implemented a fraud warning yange the present accounting system that is transparent and
accountable reporting is one of the real form of efforts to prevent fraud.

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5.1 Suggestion

As for suggestions that can provide the authors with respect to the limitations in this study are as follows:

1. For a company to increase the confidence of the shareholders of the company, the company should be able to
show a good performance of the company and convey enough information to investors regarding the
development of the company.

2. For investors and potential investors, before making an investment should seek out the company profile and
the information disclosed by the issuer company, whether it meets the information needs of the investment
analysis.

3. For further research is expected to use a different type of company and wearing broad scope of the sample. It
is also expected to add other variables that may affect the prevention of fraud such as the company's internal
control system as well as the reaction of investors such as earnings, interest rates, and others.

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