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Briefly summarize this, thank you eferences Mailings Review View Help CAUSES OF FRAUD IN FINANCIAL STATEMENTS AND TECHNOLOGY CAPABILITIES Technological capabilities are very important to
Briefly summarize this, thank you
eferences Mailings Review View Help CAUSES OF FRAUD IN FINANCIAL STATEMENTS AND TECHNOLOGY CAPABILITIES Technological capabilities are very important to companies. Since every business needs technical capabilities to achieve targets and objectives for every business. If used properly, technological capability will help businesses accomplish their targets and objectives of the business, but if technological capability is misused, it can be a way of committing fraud. Driven by inconsistent financial reporting incidents in the IT sector where technological capability is a major source of competitive advantage, this study investigates the possible relationship between technological capability and the chance of happening fraud in the financial statement Technology Capability of a company is measured by the firm's technical competencies which is ability to do work technically compared to other firms in the same field in transforming cumulative R&D resources into innovative outputs, which are a source of competitive advantage, according to the company's resource-based view (RBV). RBV is a managerial framework to determine the strategic resources a firm can exploit to achieve sustainable competitive advantage. In the line of RBV, the effect of technology on the probability of fraud is negative and economical Most companies commit fraud because of significant burden on out-performers. The study finds that firms with lower technological capability are more likely to deceive or mislead investors with falsified financial statements. Many low income companies have less technological capabilities. It is because technological capability that companies have will help the companies to achieve more profit and to achieve more company goals and targets. According to a study by Fung (2017), less technologically capable IT firms are less competitive and hence more likely to commit fraud under the enormous pressure to outperform rivals. The Companies that are not capable of producing high income will commit fraud in order to obtain confidence from investors. Research has shown that firms underperforming the market are more likely to commit fraud (eg. Fung 2015) D Presently, too many firms have plenty of rivals. In this situation many businesses have. to commit fraud in order to earn profit. According to a study by Fung (2017), The high incidence of fraudulent financial reporting by IT companies may be in part due to the large number of high-growth companies striving to keep afloat in the highly competitive market. The companies were forced to begin fraud in financial statements to show their business to their investors as well as other companies. They use their expertise in technological capability to commit fraud. They need to show that they have a stable financial position to attract more investors to invest in their business. Sustainable competitive advantage influences a manager's decision to commit fraudulent financial reporting because a company that have an advantage over competitors are tend not to consistently underperform in the market (Barney 2001). In order to avoid companies being considered as lower-performing, they tend to commit fraud to be in a comfortable position in the market and not always being under the shell. Finance and auditing research has found evidence showing that firms underperforming the market are ceteris paribus more likely to manipulate their financial statements in an attempt to improve their short-term financial appearance. As this study's hypothesis states. The probability of an firm committing fraudulent financial reporting is inversely related to the firm's technological capability. Finally, knowing a firm's technological capability is useful to investors in evaluating the firm's probability of committing fraud FocStep by Step Solution
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