DETERMINANTS OF FINANCIAL STATEMENT FRAUD OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study investigates the determinants of financial statement fraud likelihood in listed deposit money banks in Nigeria. The primary objectives are to assess the effect of pressure, opportunity, and rationalization on the likelihood of financial statement fraud. Using a quantitative research methodology, data was collected through a structured questionnaire administered to banking staff, with statistical analyses conducted using SPSS version 25. The correlation and regression analyses revealed significant relationships between the variables. Pressure exhibited a positive relationship with financial statement fraud, while opportunity showed a negative correlation. Rationalization also positively impacted financial statement fraud. These findings indicate that higher pressure and rationalization increase the likelihood of fraud, while greater opportunity, surprisingly, decreases it due to effective internal controls in place. The study concludes that pressure and rationalization are significant predictors of financial statement fraud in Nigerian banks, whereas opportunity, contrary to expectations, acts as a deterrent when mitigated by strong internal controls. Based on these findings, it is recommended that banks set realistic performance targets and provide sufficient resources to manage pressure effectively. Strengthening internal controls and audit mechanisms is essential to limit opportunities for fraud. Furthermore, fostering an ethical corporate culture through regular ethics training and clear codes of conduct can reduce the rationalization of fraudulent behaviors. Implementing these recommendations requires a comprehensive approach, combining organizational adjustments, enhanced oversight, and ethical reinforcement to create an effective fraud prevention strategy. This paper contributes original insights by revealing a counterintuitive negative relationship between opportunity and financial statement fraud likelihood, challenging traditional fraud theories. Additionally, it underlines the critical roles of organizational pressure and rationalization in driving fraud, emphasizing the need for ethical corporate cultures and robust internal controls.