Deconstructing the Fraud Heptagon: Internal Antecedents in Indonesia's Infrastructure Sector

This study aimed to examine the effect of financial target, financial stability, external pressure, personal financial need, change in directors, effective monitoring, nature of industry, change in auditors, frequency of CEO pictures, ignorance, and greed on fraudulent financial statements in infrastructure companies listed on the Indonesia Stock Exchange during the 2021–2024 period. The study employed a quantitative approach with an associative-causal design. The population consisted of 70 infrastructure companies, and a sample of 21 companies was selected through purposive sampling, resulting in 84 observations over four years. Secondary data were collected from annual reports and financial statements. The data were analyzed using panel data regression with the Fixed Effect Model after the Chow and Hausman tests, classical assumption tests, and hypothesis testing. The results showed that financial stability had a significant negative effect on fraudulent financial statements, with a regression coefficient of −232.049 and a significance value of 0.000. External pressure had a significant positive effect, with a regression coefficient of 798.317 and a significance value of 0.000. Financial target, personal financial need, change in directors, effective monitoring, nature of industry, change in auditors, frequency of CEO pictures, ignorance, and greed did not have a significant effect. The adjusted coefficient of determination indicated that 54.30 percent of the variation in fraudulent financial statements was explained by the model, while the F-test confirmed that all independent variables simultaneously affected fraudulent financial statements with a significance value of 0.000. These findings implied that external business pressures remained the strongest driver of fraudulent behavior.