Antecedents of Pentagon Fraud against Sustainability Reporting and Behavioral Organization as Intervening

Abstract

In recent years, sustainability reporting has become a global necessity to ensure transparency, accountability, and ethical behavior in organizations. However, the increasing prevalence of fraudulent practices, particularly in the context of Environmental, Social, and Governance (ESG) disclosures, presents a critical challenge. This study investigates the antecedents of fraud using the Pentagon Fraud Theory comprising pressure, opportunity, rationalization, competence, and arrogance—and examines the mediating role of organizational behavior on the quality of sustainability reporting in Muhammadiyah and Aisyiyah Higher Education Institutions (PTMA) in Indonesia. This quantitative research applies the Structural Equation Modeling–Partial Least Squares (SEM-PLS) method to analyze data from 116 PTMA respondents, selected through proportional stratified and purposive sampling. The research model integrates fraud factors as exogenous variables, organizational behavior as an intervening variable, and ESG-oriented sustainability reporting as the endogenous variable. The findings reveal that pressure, opportunity, and arrogance significantly influence ESG reporting, both directly and indirectly through organizational behavior. Meanwhile, rationalization and competence did not show a significant direct effect, but competence had a significant impact when mediated by organizational behavior. Organizational behavior itself had a strong positive effect on the quality of sustainability reporting, underscoring its importance as a mediating factor. These results highlight the need for value-based governance systems rooted in ethics, transparency, and Islamic principles, especially in educational institutions. This study contributes to the development of the Pentagon Sustainability Theory and provides strategic recommendations for building an anti-fraud culture that supports responsible ESG reporting.