The Influence of Ethical Corporate Culture on Employee Fraud Detection Reporting in Malaysian Companies: the Mediating Effect of Employees' Perception of Organisational Politics

Yew, Jin Ran (2022) The Influence of Ethical Corporate Culture on Employee Fraud Detection Reporting in Malaysian Companies: the Mediating Effect of Employees' Perception of Organisational Politics. Final Year Project (Masters), Tunku Abdul Rahman University College.

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Abstract

Fraud has increasingly become a serious issue not only in the business field but also in the government and the country as a whole. Many scandalous cases have been involved globally and locally. There is ongoing growth in ethical breaches by the Malaysian companies which is worrying and disrupting the country’s economics and reputation. Fraudulent practices are often arising in different forms of abuse like corruption, bribery and many more. Fraud has always been a particularly essential issue for the audit profession but the employees are often the ones that first detect fraud within the company which signifies the importance of being involved in the fraud detection movement. In light of this, employees play an important role in detecting fraud and it is imperative for companies to fostering an ethical corporate culture in encouraging such endeavours. Therefore, a quantitative research study is conducted by collecting primary data through an online survey questionnaire from 102 employees employed in Malaysian companies to address the research questions and objectives. Statistical testing in this study used a statistical test approach with SPSS software version 28.0 and Smart PLS software version 3.0. The findings illustrate that ethical corporate culture that involves the 7 morale virtues would promote the engagement of employees in fraud detection reporting. Moreover, this study also indicates the mediating effect of employees’ perception of organisational politics on the relationship between ethical corporate culture and employee fraud detection reporting. Theoretical and practical implications of these results will be discussed as well. This research further contributes to providing new insight into the importance of instilling an ethical corporate culture within Malaysian companies in respect of the effect on employees’ perception of organisational politics. Practically, the research creates awareness for leaders on the importance of their roles and influence on their subordinates within the organisation that boosts employees’ commitment to making the right approach to prevent any misconduct to happen.