The effect of governor’s age on fraud in Indonesia: opportunity as a mediating variable

Abstract

This study investigates the intricate relationship between a governor's age, opportunity, and the incidence of fraud within Indonesian regional administrations. Challenging conventional wisdom, it seeks to determine if age directly correlates with fraudulent activities and explores the role of fiscal decentralization. This study uses quantitative analysis with a panel data approach, including factor analysis, panel data regression, and mediation. We used purposive sampling with an observation period of 2018 – 2021 in 34 provinces, so the total sample we used was 136 analysis units for this study. The age of a governor has no direct, significant correlation with fraudulent activities. A higher ratio of transfer income is a significant, negative predictor of fraud, suggesting that increased fiscal capacity, when transparently managed, can mitigate corruption. Capital expenditure lacks a direct influence on fraud. TRAREV acts as a mediator in the relationship between a governor's age and fraud, indicating that the impact of age is contingent on the structure of fiscal transfers. This study identifies the nuanced role of fiscal governance mechanisms, particularly the mediating effect of TRAREV, in shaping governance outcomes. It calls for a paradigm shift in fraud prevention strategies, emphasizing transparency, effective resource management, and robust regulatory frameworks. This aligns with the broader need for good governance and fraud prevention strategies in Indonesia.