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Keywords = collusion motivation

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23 pages, 936 KiB  
Article
Revisiting the Fraud Triangle in Corporate Frauds: Towards a Polygon of Elements
by Paolo Roffia and Michele Poffo
J. Risk Financial Manag. 2025, 18(3), 156; https://doi.org/10.3390/jrfm18030156 - 14 Mar 2025
Cited by 1 | Viewed by 6672
Abstract
The fraud triangle has long served as a fundamental model for understanding corporate fraud, emphasizing opportunity, pressure, and rationalization. Over time, this framework evolved with the fraud diamond, which introduced capability; the fraud pentagon, which added arrogance; and the fraud hexagon, which incorporated [...] Read more.
The fraud triangle has long served as a fundamental model for understanding corporate fraud, emphasizing opportunity, pressure, and rationalization. Over time, this framework evolved with the fraud diamond, which introduced capability; the fraud pentagon, which added arrogance; and the fraud hexagon, which incorporated collusion and reshaped arrogance. Building on these developments, this study proposes a seventh dimension: the pleasure and thrill of risk-taking. This psychological factor highlights the gratification that some individuals derive from engaging in fraud as a high-stakes game. Through a qualitative analysis of five major corporate fraud cases—Société Générale, Enron, Wirecard, Parmalat, and Theranos—this study highlights the presence of this additional motivational factor. By introducing the fraud polygon, this research provides a more comprehensive framework for understanding corporate fraud’s multifaceted nature. This model has significant implications for both academic research and practical fraud prevention, offering insights into the interplay between systemic vulnerabilities and intrinsic motivations. Full article
(This article belongs to the Special Issue Bridging Financial Integrity and Sustainability)
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27 pages, 967 KiB  
Article
Predicting Risk of and Motives behind Fraud in Financial Statements of Jordanian Industrial Firms Using Hexagon Theory
by Ahmad Ahed Bader, Yousef A. Abu Hajar, Sulaiman Raji Sulaiman Weshah and Bisan Khalil Almasri
J. Risk Financial Manag. 2024, 17(3), 120; https://doi.org/10.3390/jrfm17030120 - 15 Mar 2024
Cited by 6 | Viewed by 6084
Abstract
This study intends to identify the motives that lead to increasing or fighting the fraud risk in the Financial Statements (FSs) of industrial companies whose shares are traded in regulated and unregulated markets at the Amman Stock Exchange (ASE) based on the Hexagon [...] Read more.
This study intends to identify the motives that lead to increasing or fighting the fraud risk in the Financial Statements (FSs) of industrial companies whose shares are traded in regulated and unregulated markets at the Amman Stock Exchange (ASE) based on the Hexagon theory, which divides the motives for fraud into six factors. The study relied on secondary data to collect and measure the study variables by extracting them from the annual reports that were published by those companies on the website of the ASE during the period of 2012–2017. The collected data were analyzed using the logistic regression model on the SPSS program. The results confirmed that the return on assets (ROA), percentage of independent members in audit committees, and tone-related party transactions had a statistically significant relationship with predicted fraudulent FSs, where these three variables belong to pressure, opportunity, and collusion fraud motives, respectively. Thus, it is worth mentioning that this study is distinguished from previous studies that examined the issue of fraud in Jordanian companies by detecting the motives of fraud according to the Fraud Hexagon theory. Moreover, some of the fraud motives were measured using new variables such as a change in inventory, the age of auditing committee’s members, and tone-related party transactions. Full article
(This article belongs to the Special Issue Risk Planning and Management in Companies)
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19 pages, 5109 KiB  
Article
Break the Cycle of Collusion: Simulation to Influence Mechanism of Cognitive Bias on To-Collude Decision Making
by Zhengmin Peng, Kunhui Ye and Jiale Li
Buildings 2022, 12(7), 997; https://doi.org/10.3390/buildings12070997 - 13 Jul 2022
Cited by 3 | Viewed by 2923
Abstract
Collusion is an all-pervading illegal market behavior that can undermine the sustainable development of the construction industry. It is acknowledged that collusive bidding decision making is influenced by conspirators’ cognitive bias. Nevertheless, the understanding of such an influence mechanism remains vague in the [...] Read more.
Collusion is an all-pervading illegal market behavior that can undermine the sustainable development of the construction industry. It is acknowledged that collusive bidding decision making is influenced by conspirators’ cognitive bias. Nevertheless, the understanding of such an influence mechanism remains vague in the literature. This study aims to examine the mechanism of conspirators’ to-collude decision making by establishing a system dynamic model. The model development is based on the theories of cognitive biases, collusive bidding, and complex adaptive system. Multiple scenarios were simulated in the context of the Chinese construction industry. Three most influential cognitive bias are overconfidence, the illusion of control, and cognitive dissonance. The simulation results reveal conspirators’ intrinsic mechanisms to decide whether they deserve to participate in collusive bidding. The evolution of to-collude decision making is characterized by nonlinearity, multiplier, and stimulus enhancement effects. Collusion motivation and enterprise network relationships expand conspirators’ to-collude decision making. The increase of government regulation intensity and enterprise performance inhibit conspirators’ to-collude decision making. This study provides an insight into the cycle of collusion emergence from a complex system perspective and implies that antitrust authorities can launch carrot-and-stick measures for better regulation. Full article
(This article belongs to the Section Construction Management, and Computers & Digitization)
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17 pages, 1357 KiB  
Article
TruthTrust: Truth Inference-Based Trust Management Mechanism on a Crowdsourcing Platform
by Jiyuan Zhou, Xing Jin, Lanping Yu, Limin Xue and Yizhi Ren
Sensors 2021, 21(8), 2578; https://doi.org/10.3390/s21082578 - 7 Apr 2021
Cited by 6 | Viewed by 3125
Abstract
On a crowdsourcing platform, in order to cheat for rewards or sabotage the crowdsourcing processes, spam workers may submit numerous erroneous answers to the tasks published by requesters. This type of behavior extremely reduces the completion rate of tasks and the enthusiasm of [...] Read more.
On a crowdsourcing platform, in order to cheat for rewards or sabotage the crowdsourcing processes, spam workers may submit numerous erroneous answers to the tasks published by requesters. This type of behavior extremely reduces the completion rate of tasks and the enthusiasm of honest users, which may lead a crowdsourcing platform to a failure. Defending against malicious attacks is an important issue in crowdsourcing, which has been extensively addressed by existing methods, e.g., verification-based defense mechanisms, data analysis solutions, trust-based defense models, and workers’ properties matching mechanisms. However, verification-based defense mechanisms will consume a lot of resources, and data analysis solutions cannot motivate workers to provide high-quality services. Trust-based defense models and workers’ properties matching mechanisms cannot guarantee the authenticity of information when collusion requesters publish shadow tasks to help malicious workers get more participation opportunities. To defend such collusion attacks in crowdsourcing platforms, we propose a new defense model named TruthTrust. Firstly, we define a complete life cycle system that from users’ interaction to workers’ recommendation, and separately define the trust value of each worker and the credence of each requester. Secondly, in order to ensure the authenticity of the information, we establish a trust model based on the CRH framework. The calculated truth value and weight are used to define the global properties of workers and requesters. Moreover, we propose a reverse mechanism to improve the resistance under attacks. Finally, extensive experiments demonstrate that TruthTrust significantly outperforms the state-of-the-art approaches in terms of effective task completion rate. Full article
(This article belongs to the Collection Security, Trust and Privacy in New Computing Environments)
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26 pages, 3302 KiB  
Article
Multi-Scenario Evolutionary Game of Rumor-Affected Enterprises under Demand Disruption
by Chuan Zhao, Luyao Li, Hongxia Sun and Hongji Yang
Sustainability 2021, 13(1), 360; https://doi.org/10.3390/su13010360 - 3 Jan 2021
Cited by 7 | Viewed by 2659
Abstract
Rumors regarding food, medicine, epidemic diseases, and public emergencies greatly impact consumers’ purchase intention, disrupt market demand, affect enterprises’ operating strategies, and eventually increase the risk of market chaos. Governments must play an active role with limited resources under the situation of rumor [...] Read more.
Rumors regarding food, medicine, epidemic diseases, and public emergencies greatly impact consumers’ purchase intention, disrupt market demand, affect enterprises’ operating strategies, and eventually increase the risk of market chaos. Governments must play an active role with limited resources under the situation of rumor spreading and demand disruption to maintain stable and sustainable market development. To identify the optimal evolutionary stable strategy (ESS) of both small and large enterprises when facing rumors, this paper investigates the following two choices of enterprises: reasonable and unreasonable pricing. The results reveal that government supervision priority should be set based on the rumor severity, collusion in markup and the endogeneity of the enterprises. From an exogenous perspective, rumor spreading induces enterprises to overcharge, and government supervision has the opposite effect. However, the demand disruption ratio is proven to motivate enterprises to implement reasonable pricing. The profit and loss ratio and homoplasy are two endogenous factors affecting enterprise decisions. Small enterprises are more likely to take advantage of public panic and overcharge, while large enterprises are inclined to choose reasonable pricing in consideration of their corporate image. In addition, the evidence indicates that the ESS of large firms has a stronger impact on small firms. Full article
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16 pages, 261 KiB  
Article
Tacit Collusion under Fairness and Reciprocity
by Doruk İriş and Luís Santos-Pinto
Games 2013, 4(1), 50-65; https://doi.org/10.3390/g4010050 - 7 Feb 2013
Cited by 7 | Viewed by 6535
Abstract
This paper departs from the standard profit-maximizing model of firm behavior by assuming that firms are motivated in part by personal animosity–or respect–towards their competitors. A reciprocal firm responds to unkind behavior of rivals with unkind actions (negative reciprocity), while at the same [...] Read more.
This paper departs from the standard profit-maximizing model of firm behavior by assuming that firms are motivated in part by personal animosity–or respect–towards their competitors. A reciprocal firm responds to unkind behavior of rivals with unkind actions (negative reciprocity), while at the same time, it responds to kind behavior of rivals with kind actions (positive reciprocity). We find that collusion is easier to sustain when firms have a concern for reciprocity towards competing firms provided that they consider collusive prices to be kind and punishment prices to be unkind. Thus, reciprocity concerns among firms can have adverse welfare consequences for consumers. Full article
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