The moderating role of uncertainty avoidance in the Fraud Hexagon framework: Evidence from Indonesia, Malaysia and Singapore

Background: Financial statement fraud, asset misappropriation and corruption remain persistent challenges in Indonesia, Malaysia and Singapore. The basic materials sector, characterised by high-value assets and substantial financial flows, is particularly vulnerable to such practices. As a key supplier of raw materials for multiple industries, firms in this sector face heightened incentives for financial statement manipulation, especially under conditions of economic pressure or weak corporate governance. Aim: This study examines the influence of the Fraud Hexagon elements (pressure, opportunity, rationalisation, capability, arrogance and collusion) on the likelihood of financial statement fraud, while also exploring the moderating role of national cultural values, specifically uncertainty avoidance. Setting: Financial statement fraud among basic materials companies in Indonesia, Malaysia and Singapore spanning the years 2021 to 2023. Method: Utilising a dataset of 216 firm-year observations from Indonesia, Malaysia and Singapore spanning the years 2021 to 2023, the study employs a panel data regression model with moderated regression analysis. Result: The findings indicate that pressure and capability are significant predictors of fraudulent financial reporting. Moreover, uncertainty avoidance significantly moderates the relationships between pressure and collusion and financial statement fraud, strengthening their impact. Conclusion: These results suggest that both organisational and cultural factors shape fraudulent behaviour, emphasising the importance of culturally responsive anti-fraud frameworks and governance mechanisms. Contribution: This study contributes to fraud theory by integrating behavioural, organisational and cultural dimensions, offering valuable insights for auditors, regulators and policymakers operating in culturally diverse contexts.