Scientific Papers

JOURNAL OF INTERNATIONAL STUDIES


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ISSN: 2306-3483 (Online), 2071-8330 (Print)



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Integrating ethical values into fraud triangle theory in assessing employee fraud: Evidence from the Malaysian banking industry

Vol. 10, No 2, 2017

 

Jamaliah Said

 

Universiti Teknologi MARA,
Shah Alam, Malaysia
Email: jamaliah533@salam.uitm.edu.my

 

 

Integrating ethical values into fraud triangle theory in assessing employee fraud: Evidence from the Malaysian banking industry

 

Mahmudul Alam

 

Universiti Utara Malaysia,
Sintok, Malaysia
Email: rony000@gmail.com

 

 

Masitah Ramli

 

Universiti Teknologi MARA,
Shah Alam, Malaysia

Email: masitahramli@yahoo.com


Marhamah Rafidi

 

Universiti Teknologi MARA,
Shah Alam, Malaysia

Email: marhamahrafidi89@gmail.com

 

 

 

Abstract. This study attempts to integrate ethical values into the fraud triangle theory in the context of Malaysian banking industry. Primary data were collected through the survey of 108 questionnaires administered to the employees of the top three largest banks in Malaysia. The findings revealed that ethical values were negatively related to employee fraud, and two elements of fraud triangle theory, namely, opportunity and rationalization, were positively related to employee fraud. This implies that high ethical value is crucial to mitigate employee fraud. To minimize employee fraud, the banking industry should reduce opportunities and employee negative rationalization through strong internal control. This study contributes to literature on the occurrences of employee fraud, which is not widely discussed, especially in the context of the banking industry in developing countries.

 

Received: January, 2017

1st Revision: March, 2017

Accepted: May, 2017

 

DOI: 10.14254/2071-8330.2017/10-2/13

 

JEL Classification: G21, E59

Keywords: fraud triangle theory, banking sector, ethical value, Malaysia