EVALUATING THE EFFECTS OF FINANCIAL STATEMENT FRAUD ON INVESTOR TRUST IN PUBLICLY TRADED COMPANIES IN MALAYSIA

Abstract

This study investigates the impact of financial statement fraud on investor trust in publicly listed companies in Malaysia. It explores how weak corporate governance, lack of transparency, and ineffective audit committees contribute to fraudulent financial reporting, which in turn erodes investor confidence. The research draws on a mixed-methods approach, incorporating primary data through structured questionnaires and secondary data from case studies and literature. A sample of 49 respondents from diverse professional backgrounds participated in the survey, revealing significant concerns about fraud, governance failures, and insufficient oversight mechanisms. Statistical analysis confirmed that effective governance, transparent reporting, and independent audit committees positively influence investor confidence and can serve as key deterrents to financial statement fraud. The findings highlight that poor corporate governance structures and the absence of robust accountability mechanisms create opportunities for fraudulent practices, leading to financial market instability and reduced investment inflows. The study recommends stronger implementation of corporate governance frameworks, enhanced auditor independence, and greater shareholder empowerment to rebuild investor trust and safeguard Malaysia’s capital markets from future scandal