Unmasking Financial Report Manipulation: A Forensic Analysis of Its Impact on Stock Returns in Indonesia's Energy Sector

The Indonesian energy sector, while holding immense potential, is susceptible to financial statement manipulation. This study examines the prevalence of such manipulation in public energy companies and its impact on stock returns. Utilizing a quantitative approach, this research analyzes 47 public companies operating in the energy sector in the country of Indonesia and listed in the stock market in Indonesia during the period 2018-2022. M-Score Beneish, the tool to detect financial manipulation, is employed to assess the likelihood of manipulation.
The findings reveal that a significant proportion of companies exhibit potential manipulation. However, further analysis shows that financial statement manipulation has no significant impact on share returns. Finally, further research is needed to identify factors that have a higher impact on the performance of energy sector stocks, such as industry dynamics, macroeconomic conditions and investor sentiment. Future research could consider a broader range of variables, alternative detection models, or focus on specific sub-sectors.