Banca de DEFESA: Térsio Arcúrio Júnior

THE INFLUENCE OF PERSONALITY TRAITS BETWEEN INTERNAL CONTROL ENVIRONMENTS AND FRAUD IN FINANCIAL STATEMENTS

Personality Traits; Internal Control; Accounting Fraud.

Fraud in financial statements brings enormous losses to organizations and society. Weakness in internal controls is identified as one of the main factors that provide opportunities for this type of fraud. Although, in recent decades, there has been greater concern with the structuring of an internal control environment, the emergence of several new cases of fraud has been

observed. This scenario highlights the need to investigate other factors that may be associated with fraud. The literature demonstrates that ethical, social and cultural factors can influence the decision to perpetrate fraud. That is, individuals' skills and abilities are important attributes that can induce the perpetrator's behavior. Furthermore, these skills and abilities can be investigated from a personality perspective, as it is possible to anticipate an individual's behavior based on their personality traits. Trait theory postulates that behavior can be associated with its respective personality trait, as well as being influenced by the environment. One of the personality structuring models is the Big-Five personality model. This model has five basic dimensions: Extraversion, Agreeableness, Conscientiousness, Neuroticism (Emotional Stability) and Openness to Experience. These personality traits may indicate a behavioral profile with a higher risk of perpetrating fraud in financial statements, especially under the existence of weaknesses in internal control. Given this, it is important to move towards better understanding the fraudulent act, that is, investigating the personality traits (Big Five) in relation to the risk of fraud in financial statements, considering different internal control environments. To this end, experimental research (2x2) was carried out, with the creation of scenarios, aiming to capture the intensity of the choice of perpetration, considering different internal control environments. Descriptive statistics, the test of means (t test) and ordinal logistic regression were used to data analyze. The main results of the research indicate that being male, having a higher level of formal education, having academic training in accounting sciences, working or having worked in medium and large companies and having more experience are factors that contribute to a lower risk of perpetration of fraud in the financial statements. Furthermore, it was identified that the internal control environment weakness increases the risk of fraud in the financial statements, however, the variable that captures the perception of the internal control environment was positively associated with the greater fraud risk in the financial statements. There is evidence that increasing “Conscientiousness” and “Emotional Stability” reduces the chances of fraud risk, while “Agreeableness” increases them. Finally, greater “Extroversion” and “Openness to Experience” may signal a profile of financial directors with a higher risk of fraud. Regarding contributions, the study intended to contribute to the literature regarding the practice of fraud, advancing in relation to previous research by jointly addressing accounting aspects, personality traits and different internal control environments. The study brought more elements to compare results, especially regarding training in accounting sciences and its effects on reducing the chances of the fraud risk in financial statements. In the practical aspect, the study highlighted elements to model a more appropriate profile for the role of financial director, considering different contexts of internal control environment.