Which Personal Beliefs and Values Make Fraud Justifications Easier? Evidence from the World Value Survey.

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Abstract

In this paper I use Word Value Survey data to explore financial pressures, personal beliefs, and values as determinants of people’s predisposition toward fraud. Applying the emerging method of analysis – the partial least squares path modeling – I report that, consistent with suggestions of fraud triangle theory, financial pressures significantly increase predisposition toward fraud. In addition, financial pressures are positively associated with life dissatisfaction and negatively associated with feeling of being in control as well as with beliefs in hard work as the crucial success factor. Life dissatisfaction, commonly labeled as Relative Deprivation in scholar literature, does not seem to affect fraud predisposition. Feeling of being in control also does not affect fraud predisposition directly but such feeling is positively associated with the beliefs in importance of hard work. Further on, survey respondents who believe in importance of hard work as the crucial success factor exhibit lower predisposition toward fraud. Thus, people’s beliefs in importance of hard work fully (partially) mediate the relationship between feeling of being in control (financial pressures) and fraud predisposition. Finally, I report that other personality traits and beliefs such as self-enhancing vs. self-transcending values and gender bias influence people’s predisposition toward fraud. This evidence provides useful insights on why some people commit crime in certain circumstances while others are able to resist pressures and temptations. As a result, organizations might consider enhancing certain beliefs of their employees and promoting certain value-oriented aspects of their culture in order to prevent and deter fraud while auditors might incorporate these features of the corporate culture in their fraud risk assessments.

Author

• Natalia Maksimovna Mintchik, University of Cincinnati