Leverage, Capital Turnover, and Financial Stability on Financial Statement Fraud: Testing the Moderating Effect of Financial Target

This study aims to analyze the effect of leverage, capital turnover, and financial stability on financial statement fraud, with financial target as a moderating variable. The research uses a quantitative approach with a sample of 16 manufacturing companies listed on the Indonesia Stock Exchange (IDX) in the basic and chemical industry sector for the 2017– 2021 period. The sampling technique used was purposive sampling, and data were analyzed using panel data regression through Eviews 9.0 software. The model selected was the Common Effect Model (CEM) after conducting the Chow, Hausman, and Lagrange Multiplier tests. The results show that financial stability has a positive and significant effect on financial statement fraud, while leverage and capital turnover have no significant effect. Furthermore, financial target strengthens the influence of financial stability on financial statement fraud but does not moderate the relationship between leverage and capital turnover with financial statement fraud. These findings contribute to the literature on fraud detection by integrating financial performance indicators and managerial targets, and provide practical implications for companies and auditors to identify potential risks of financial statement manipulation.