Home / Current Issue / Paper 1715370
Opportunity and Pressure Dynamics On Financial Statement Fraud in Listed Consumer Goods Firms of Nigeria
Subject area: Management and Commerce · Area of research: Accounting and Finance
Abstract
In Nigeria, the consumer goods industry faces multiple operational and financial challenges, including inflationary pressures, fluctuating exchange rates, and high production costs. These macroeconomic conditions often impose intense financial stress on managers, thereby increasing the propensity to engage in fraudulent reporting. The study examined Opportunity and Pressure Dynamics on Financial Statement Fraud of Listed Consumer Goods Firms in Nigeria. Employing Ex-post facto research design and secondary data from audited annual reports spanning 2015 to 2024. The population and sample size of this study is twenty-two (22) listed Consumer goods firm on the Nigeria Exchange Group as at 31st December, 2024. Utilizing panel data and employing a Fixed Effects regression model on a sample of firms, the analysis reveals two pivotal findings. First, Audit Committee Independence has positive and significant relationship with Altman Z-Score (AZS). This indicates that stronger governance oversight acts as a protective mechanism, enhancing financial reporting integrity and reducing fraud risk, thereby improving financial health. Secondly Financial Leverage has negative but significant relationship with AZS, confirming that high debt levels increase financial pressure and the risk of distress. The study concluded that opportunity and pressure dynamics have significant effect on financial statement fraud (FSF) among listed consumer goods firms in Nigeria. The study recommends that regulators enforce stricter governance codes on committee independence, and that firms’ management adopt conservative financing strategies to build resilience and sustain long-term financial health.
Keywords
Opportunity, Pressure, Financial Statement Fraud, Financial Leverage, Audit Committee Independence
References
[1] ACFE. (2018). Report to the Nations on Occupational Fraud and Abuse. Association of Certified Fraud Examiners.
[2] Abbott, L. J., Parker, S., & Peters, G. F. (2022). Audit committee characteristics and financial reporting quality: A review and synthesis. Journal of Accounting Literature, 48, 1–25.
[3] Aghghaleh, S. F. (2014). Detecting financial statement fraud: The role of auditors and corporate governance mechanisms. Procedia - Social and Behavioral Sciences, 145(1), 376–387.
[4] Albrecht, W. S., Albrecht, C. O., Albrecht, C. C., & Zimbelman, M. F. (2008). Fraud examination (3rd ed.). South-Western Cengage Learning.
[5] Albrecht, W. S., Howe, K. R., & Romney, M. B. (2006). Deterring fraud: The internal auditor’s perspective. Institute of Internal Auditors Research Foundation.
[6] Albrecht, W. S., Kranacher, M.-J., & Albrecht, C. O. (2018). Forensic accounting, fraud examination, and financial forensics. Cengage Learning.
[7] Al-Matari, E. M. (2023). Corporate governance mechanisms, financial leverage and financial reporting quality: Evidence from emerging economies. Corporate Governance: The International Journal of Business in Society, 23(2), 356–373.
[8] Altman, E. I. (2000). Predicting financial distress of companies: Revisiting the Z‐score and ZETA® models. Journal of Banking & Finance, 1(1), 1–54.
[9] Alzoubi, E. S. S. (2024). Audit committee independence, earnings management and audit quality: Evidence from emerging markets. International Journal of Accounting & Information Management, 32(1), 45–63.
[10] Angeline, A., & Sitorus, T. (2020). Firm size, profitability, and value: Evidence from manufacturing companies. Journal of Economics and Business Research, 26(2), 145–156.
[11] Anichebe, A., Okafor, L., & Eze, J. (2019). Determinants of financial statement fraud in Nigerian firms. Journal of Accounting and Financial Management, 7(2), 45–59.
[12] Association of Certified Fraud Examiners (ACFE). (2016). Report to the Nations on Occupational Fraud and Abuse. Austin, TX: ACFE.
[13] Association of Certified Fraud Examiners (ACFE). (2022). Report to the nations: 2022 global study on occupational fraud and abuse. ACFE. https://www.acfe.com
[14] Beasley, M. S., Carcello, J. V., Hermanson, D. R., & Lapides, P. D. (2016). Fraudulent financial reporting: Consideration of industry traits and corporate governance mechanisms. Accounting Horizons, 30(4), 789–812.
[15] Brealey, R. A., Myers, S. C., & Allen, F. (2020). Principles of corporate finance (13th ed.). McGraw-Hill Education.
[16] Buckhoff, T. A. (2017). Preventing employee fraud by minimizing opportunity. Journal of Forensic & Investigative Accounting, 9(1), 495–505.
[17] Cotton, W. (2012). Financial fraud and its implications for corporate governance. Journal of Corporate Governance and Ethics, 9(3), 112–128.
[18] Cressey, D. R. (1953). Other people’s money: A study in the social psychology of embezzlement. Free Press.
[19] Cressey, D. R. (1971). Other people’s money: A study in the social psychology of embezzlement. Belmont, CA: Wadsworth Publishing.
[20] Crowe, S. (2011). The fraud pentagon. Journal of Corporate Accounting & Finance, 22(5), 39–46.
[21] Damodaran, A. (2021). Corporate finance: Theory and practice (5th ed.). John Wiley & Sons.
[22] Dellaportas, S. (2013). Conversations with inmate accountants: Motivation, opportunity and the fraud triangle. Accounting Forum, 37(1), 29–39. https://doi.org/10.1016/j.accfor.2012.09.003
[23] Djatnicka, N., Rahmawati, S., & Fitriana, D. (2023). Fraud triangle perspective in detecting financial statement fraud using the Beneish M-score model in property and real estate companies. Journal of Financial Crime Studies, 12(3), 44–59.
[24] Evana, E., Rahayu, K., & Indrawati, N. (2019). The effect of audit committee characteristics on financial statement fraud. International Journal of Innovation, Creativity and Change, 5(2), 123–137.
[25] Gbadebo, O. A., Adebayo, S. T., & Yusuf, M. A. (2023). Likelihood of manipulations in financial reports of Nigerian financial service firms: Evidence from the Beneish M-score model. International Journal of Accounting and Finance Research, 11(2), 88–105.
[26] Grice, J. S., & Ingram, R. W. (2021). Tests of the generalizability of Altman’s bankruptcy prediction model. Journal of Business Research, 7(2), 151–163.
[27] Handoko, T., & Natasya, S. (2019). Banking sector fraud and financial reporting integrity. Indonesian Journal of Business and Accounting, 6(1), 22–35.
[28] Hasnan, S., Rahman, R. A., & Mahenthiran, S. (2013). Management motive, weak governance, earnings management, and fraudulent financial reporting. Journal of International Accounting Research, 12(1), 1–27.
[29] Hayes, R. (2022). Principles of auditing: An introduction to international standards on auditing. Pearson Education.
[30] Herbenita, D., Sari, N. R., & Kurniawan, E. (2023). Fraud triangle and potential of fraudulent financial statements in manufacturing companies in Indonesia. Asian Journal of Business and Accounting Research, 9(1), 25–39.
[31] Ika, S. R., & Ghazali, N. A. M. (2022). Audit committee effectiveness and financial reporting quality: The moderating role of independence. Managerial Auditing Journal, 37(6), 742–764.
[32] Indarto, S., & Ghozali, I. (2016). The effect of financial targets and corporate governance on financial statement fraud. Risk Governance and Control: Financial Markets & Institutions, 6(4), 491–498.
[33] Joseph, A., & Isiaka, S. (2022). Tone at the top and risk management: Empirical evidence from Nigerian listed financial services firms. Journal of Accounting and Corporate Governance, 9(2), 45–61.
[34] Kassem, R., & Higson, A. (2012). The new fraud triangle model. Journal of Emerging Trends in Economics and Management Sciences, 3(3), 191–195.
[35] Kenyon, W., & Tilton, P. D. (2015). The nature of financial pressure and its link to fraud. Journal of Forensic Studies in Accounting and Business, 7(1), 45–60.
[36] KPMG. (2023). Audit committee handbook. KPMG International.
[37] Kung’u, J. N. (2015). Factors influencing financial performance of small and medium enterprises in Kenya. International Journal of Economics, Commerce and Management, 3(11), 1–15.
[38] Kurnia, P., & Anis, I. (2023). Financial pressure, leverage and fraudulent financial reporting: Empirical evidence from developing economies. International Journal of Economics, Business and Accounting Research, 7(3), 412–425.
[39] Lister, L. M. (2007). A practical approach to fraud risk: Internal auditor’s perspective. Managerial Auditing Journal, 22(6), 532–549. https://doi.org/10.1108/02686900710759384
[40] Mahayani, M., Sari, R. P., & Wicaksono, A. (2025). The fraud hexagon and the moderating role of the audit committee on financial statement fraud: Evidence from Indonesia. Journal of Accounting and Fraud Studies, 14(2), 45-60.
[41] Martins, A., & Júnior, R. (2020). Management pressure and fraudulent financial reporting: A review. International Journal of Accounting Research, 8(1), 1–12.
[42] Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American Economic Review, 48(3), 261–297.
[43] Mohd-Sanusi, Z., Mohamed, N., Omar, N., & Nassir, M. (2015). Effects of internal control system, ethical climate, and monitoring mechanisms on the effectiveness of whistle-blowing. Procedia Economics and Finance, 28(1), 190–201. https://doi.org/10.1016/S2212-5671(15)01100-0
[44] Morales, J., Gendron, Y., & Guénin-Paracini, H. (2014). The construction of the risky individual and vigilant organization: A genealogy of the fraud triangle. Accounting, Organizations and Society, 39(3), 170–194. https://doi.org/10.1016/j.aos.2014.01.006
[45] Murdock, H. (2018). The three dimensions of fraud: Motivation, opportunity, and rationalization. Journal of Forensic & Investigative Accounting, 10(2), 69–78.
[46] Murtanto, & Umar, H. (2016). Factors influencing financial statement fraud in Indonesia. International Journal of Economics and Management, 10(2), 45–57.
[47] Narsa, I. M., Putu, N. A., & Ketut, A. D. (2023). Fraud triangle and earnings management based on the modified M-score: Evidence from Indonesian manufacturing firms. Journal of Contemporary Accounting Research, 7(2), 55–70.
[48] National Commission on Reporting Financial Fraudsters. (2017). Report on financial statement manipulation. Government Printing Office.
[49] Nicolaides, A., & Trafford, S. (2019). An analysis of the fraud triangle in the corporate sector. International Journal of Business Governance and Ethics, 14(4), 474–492. https://doi.org/10.1504/IJBGE.2019.102223
[50] OECD. (2023). G20/OECD principles of corporate governance (2023 ed.). OECD Publishing. https://doi.org/10.1787/ed750b30-en
[51] Ogunsola, O. F. (2024). Corporate governance mechanisms and financial reporting quality of listed firms in Nigeria. Journal of Accounting and Taxation, 16(2), 31–45.
[52] Okafor, C., Ezeagba, C. E., & Aggreh, M. (2024). Pressure as a fraud risk factor for fraudulent financial reporting among commercial banks in Nigeria. Journal of Global Accounting, 9(4), 389–409.
[53] Oluwagbade, A. A., Adeyemi, B. O., & Okoye, E. I. (2023). Fraud diamond model and fraudulent financial reporting of deposit money banks in Nigeria. African Journal of Accounting, Auditing and Finance, 12(1), 101–121.
[54] Omar, N., Mohamad, M., & Hesri, M. (2010). Financial statement fraud: Detection and prevention mechanisms. Asian Journal of Accounting and Governance, 1(1), 45–54.
[55] Oyong, L., Farhan, D., Dahlan, A., Hertato, R. H., & Aziz, B. S. (2025). Fraud diamond determinants of potential financial reporting fraud. JRAK, 17(1), 127–138
[56] Ozcelik, H. (2020b). Financial pressure and earnings manipulation: Evidence from emerging markets. Managerial Auditing Journal, 35(3), 345–360.
[57] Pucheta-Martínez, M. C., & García-Meca, E. (2022). Audit committee independence and financial reporting quality: The mediating effect of audit quality. European Management Journal, 40(5), 789–802.
[58] Puspitaningtyas, Z. (2019). Firm size, profitability, and financial performance: An empirical study of Indonesian companies. International Journal of Business and Management Invention, 8(9), 56–63.
[59] Putri, N. P., & Fadilah, R. (2023). Analisis faktor–faktor fraud diamond dan ukuran perusahaan terhadap kecurangan laporan keuangan pada perusahaan sub sektor transportasi yang terdaftar di Bursa Efek Indonesia periode 2019–2021. Jurnal Akuntansi dan Keuangan Indonesia, 8(2), 33–49.
[60] Ratmono, D., Sholihin, M., & Purwanto, A. (2020). Corporate governance, audit quality, and financial statement fraud: Evidence from Indonesia. Cogent Business & Management, 7(1), 1–15. https://doi.org/10.1080/23311975.2020.1735689
[61] Razaeel, M. (2014). Corporate fraud and forensic accounting. Journal of Financial Crime, 21(3), 382–399.
[62] Ross, S. A., Westerfield, R. W., & Jaffe, J. (2019). Corporate finance (12th ed.). McGraw-Hill Education.
[63] Ruankaew, T. (2016). Beyond the fraud triangle. International Journal of Business Management and Economic Research, 7(1), 474–476.
[64] Rubin, P. (2015). The economic consequences of accounting fraud. Journal of Business Ethics, 132(1), 91–102.
[65] Schildbach, T. (2017). Financial ratios and company performance analysis. Journal of Financial Studies, 12(4), 45–60.
[66] Silvia, A., Rahma, D., & Hadi, P. (2023). Factors influencing fraudulent financial reporting in Indonesian manufacturing companies. Journal of Accounting and Financial Analysis, 10(2), 65–79.
[67] Situngkir, T. L., & Triyanto, D. N. (2020). The effect of financial leverage and other fraud diamond elements on financial statement fraud. International Journal of Scientific & Technology Research, 9(3), 1000–1006.
[68] Skousen, C. J. (2019). Fraud risk assessment: Understanding pressure and opportunity in fraud triangle. Accounting Perspectives, 18(4), 457–474.
[69] Skousen, C. J., Smith, K. R., & Wright, C. J. (2009). Detecting and predicting financial statement fraud: The effectiveness of the fraud triangle and SAS No. 99. Advances in Financial Economics, 13, 53–81.
[70] Sudirman, S. (2023). Effect of pressure, opportunity, and rationalization on fraudulent financial statements in banking companies in South Sulawesi. Asian Journal of Accounting Research, 8(3), 102–114.
[71] Suh, J. (2019). Opportunity theory and corporate crime. Crime, Law and Social Change, 71(4), 387–405. https://doi.org/10.1007/s10611-018-9795-4
[72] Suswam, T. I., Udo, B. O., & Ojo, R. A. (2024). Effect of pressure on fraudulent financial reports of listed industrial firms in Nigeria (2012–2022). Nigerian Journal of Accounting and Management Research, 15(1), 77–93.
[73] Tonye, O., & Boloumbele, Y. (2023). Audit committee effectiveness and financial statement fraud of listed consumer goods firms in Nigeria. BW Academic Journal, 7(1), 112–127.
[74] U.S. Securities and Exchange Commission (SEC). (2002). Sarbanes–Oxley Act of 2002. Washington, DC: U.S. Government Printing Office.
[75] Uwah, E. O., Okey, A. U., & Hassan, M. A. (2023). Accounting ratios and detection of false financial statements of firms listed on the Nigerian Exchange Group PLC. Journal of Forensic Accounting and Fraud Prevention, 9(2), 112–128.
[76] Vona, L. W. (2008). Fraud risk assessment: Building a fraud audit program. Wiley.
[77] Vousinas, D. (2019). Fraud hexagon: A comprehensive framework for analyzing corporate fraud. Journal of Financial Crime, 26(4), 1023–1045.
[78] Waley, A. R., Ibrahim, M., & Abdullahi, S. I. (2025). Financial leverage, audit risk and corporate governance effectiveness in emerging markets. Journal of Financial Analysis, 13(4), 55–71.
[79] Wolfe, D. T., & Hermanson, D. R. (2004). The fraud diamond: Considering the four elements of fraud. The CPA Journal, 74(12), 38–42.
[80] World Bank. (2018). World Development Report 2018: Learning to realize education’s promise. Washington, DC: World Bank.
[81] Yasa, I. G. W., Putri, I. G. A. M. D., & Suryanawa, I. K. (2025). The effect of the fraud diamond on financial statement fraud in the Indonesian banking sector. International Journal of Financial Research, 16(1), 112-125.
How to cite this paper
@article{1715370,
author = {Mohammed Mahmoud Adamu, Solomon Mangba Aza (Prof.), Daniel Emmanuel (Ph.D)},
title = {Opportunity and Pressure Dynamics On Financial Statement Fraud in Listed Consumer Goods Firms of Nigeria},
journal = {Iconic Research And Engineering Journals},
year = {2026},
volume = {9},
number = {9},
pages = {1921-1940},
issn = {2456-8880},
url = {https://www.irejournals.com/formatedpaper/1715370.pdf},
abstract = {In Nigeria, the consumer goods industry faces multiple operational and financial challenges, including inflationary pressures, fluctuating exchange rates, and high production costs. These macroeconomic conditions often impose intense financial stress on managers, thereby increasing the propensity to engage in fraudulent reporting. The study examined Opportunity and Pressure Dynamics on Financial Statement Fraud of Listed Consumer Goods Firms in Nigeria. Employing Ex-post facto research design and secondary data from audited annual reports spanning 2015 to 2024. The population and sample size of this study is twenty-two (22) listed Consumer goods firm on the Nigeria Exchange Group as at 31st December, 2024. Utilizing panel data and employing a Fixed Effects regression model on a sample of firms, the analysis reveals two pivotal findings. First, Audit Committee Independence has positive and significant relationship with Altman Z-Score (AZS). This indicates that stronger governance oversight acts as a protective mechanism, enhancing financial reporting integrity and reducing fraud risk, thereby improving financial health. Secondly Financial Leverage has negative but significant relationship with AZS, confirming that high debt levels increase financial pressure and the risk of distress. The study concluded that opportunity and pressure dynamics have significant effect on financial statement fraud (FSF) among listed consumer goods firms in Nigeria. The study recommends that regulators enforce stricter governance codes on committee independence, and that firms’ management adopt conservative financing strategies to build resilience and sustain long-term financial health.},
keywords = {Opportunity, Pressure, Financial Statement Fraud, Financial Leverage, Audit Committee Independence},
month = {March},
doi = {https://doi.org/10.64388/IREV9I9-1715370}
}