Examining the Effect of External Monitoring on the Relationship between Social Capital and Probability of Fraud

The effect of monetary variables on other variables in the company has been considered in many studies in the field of accounting; however, less research has focused on non-monetary variables such as culture, ethics, beliefs, and religion. Accordingly, the present study investigates the relationship between social capital on the probability of fraud as well as the impact of external monitoring on this relationship. In the present study, which is a descriptive correlational and a causal research, 144 companies listed in Tehran Stock Exchange were studied using multivariate regression model during 2009 to 2018 (10 years). According to the obtained results, there is a significant negative relationship between social capital and the fraud probability, but external monitoring has no effect on this relationship. The findings of this study also show that companies are less likely to commit fraud in the situation of high social capital and its results can be used by investors, government and auditors in decision making.