Experimental Study of the Influence of the Level of Religious and Moral Reasoning on Fraudulent Financial Reporting Behavior

This research aims to investigate the influence of pressure for compliance with superiors on fraudulent financial reporting behavior. The study uses 2x1 factorial design, manipulating compliance pressure on fraudulent financial reporting. Participants (n=64) from Indonesian Accounting Firms engaged in two distinct sessions, evaluating moral reasoning and religiosity levels. The second session introduced two experiment conditions, one with superior pressure and one without. The detailed procedural steps ensured a controlled and comprehensive approach to data collection, enhancing the study’s reliability. The test results using the Independent Sample t-test and contrast test in ANOVA indicated that fraudulent financial reporting appeared in groups with 1). Conditions of compliance pressure; 2). Low level of moral reasoning; and 3). A combination of being in a condition of obedience pressure and having a low level of moral reasoning. This research comprehensively explores fraudulent financial reporting dynamics in the public sector, highlighting the critical roles of obedience pressure and moral reasoning. While religiosity’s impact remains intricate, the study underscores the necessity of robust ethical training and precise measurement tools. The implications advocate tailored strategies that prioritize transparency, integrity, and ethical conduct, fostering sustainable ethical practices globally.