Sustainability Report Disclosure Using the Fraud Hexagon Model: Stakeholder Pressure as a Moderating Variable

Abstract

This study aims to examine the influence of the Fraud Hexagon framework on sustainability reporting practices within Indonesia’s palm oil sector, while assessing the moderating role of stakeholder pressure. The Fraud Hexagon, consisting of pressure, opportunity, rationalization, competence, arrogance, and collusion, provides a comprehensive theoretical lens to explain fraudulent tendencies in corporate disclosure. Stakeholder pressure, originating from investors, regulators, and civil society, is expected to strengthen or weaken the relationship between Fraud Hexagon elements and the quality of sustainability reporting. A quantitative approach was employed using panel data from palm oil companies covering the period 2020–2025. Data analysis was conducted through Structural Equation Modeling (SEM) based on Partial Least Squares (SmartPLS) and Moderated Regression Analysis (MRA) to test the proposed hypotheses. This study reveals that among the six dimensions of the Fraud Hexagon, only pressure and opportunity have a significant influence on sustainability reporting disclosure. Conversely, the dimensions of rationalization, capability, arrogance, and collusion show no significant effect, indicating that in the palm oil sector, internal behavioral factors of management are not always the primary determinants of sustainability reporting practices. Furthermore, the moderation test results demonstrate that stakeholder pressure only moderates the relationship between opportunity and sustainability reporting disclosure. Stakeholder pressure weakens the effect of opportunity, meaning that the chances companies have to manipulate disclosure are more controlled by external expectations. However, stakeholder pressure does not moderate the relationships between pressure, rationalization, capability, arrogance, or collusion and sustainability reporting disclosure.