DETERMINANTS OF FINANCIAL STATEMENTS FRAUD LIKELIHOOD OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study examines the determinants of financial statement fraud likelihood among Deposit Money Banks (DMBs) in Nigeria, focusing on pressure, opportunity, and rationalization as key variables. The Beneish M-score model is employed to assess fraud likelihood using data from Nigerian DMBs over the period 2018-2023. Ordinary least square (OLS) regression analysis was used to test the hypotheses. The findings reveal that internal pressures such as financial targets and external pressures such as market competition significantly increase the likelihood of financial statement fraud. Weaknesses in internal controls and inadequate oversight provide opportunities for manipulation, particularly in complex financial transactions. Moreover, cognitive rationalizations, including perceived justifications for fraudulent actions, exacerbate fraud risks within the banking sector. Recommendations include strengthening corporate governance mechanisms, enhancing audit procedures, and improving regulatory oversight to mitigate these risks and promote transparency in financial reporting practices among Nigerian DMBs.