This thesis aims to explore the factors determining fraud in retail companies in the UK and the mechanisms that can be used to improve fraud detection and fraud prevention. The conceptual framework of the study is based predominantly on the Fraud Triangle Theory. This theory helps to explain the behavioural factors behind fraud and why instances of fraud take place.
The aim and objectives of this thesis are attained using a mixed-methods research design based on primary data analysis. The primary data is collected by means of structured questionnaires and interviews over skype. The questions in the survey are coded using the Likert scale and analysed in SPSS. The main methods of analysis implemented in this study include frequency tables, descriptive statistics, t-tests, ANOVA, Cronbach’s alpha, logistic regression modelling and structural equation modelling (SEM). Interview questions are interpreted using a qualitative thematic analysis.
The final sample of respondents represented 106 managers and employees from UK retail companies. The companies are taken from both the traditional sector and e-commerce. These 106 responses were collected from October 2019, when the first pilot study was arranged, to January 2021. The results demonstrate that the necessity for managers to sign an anti-fraud statement, the perceived higher quality of external audit, and the existence of an anonymous hotline for reporting fraudulent activities have a significant impact on the probability of fraud occurrence. The probability of fraud occurrence is also found to be correlated with the size of the company, which is consistent with the Opportunity dimension of the Fraud Triangle. It has also been revealed that monetary rewards for anonymous reporting of fraud produced a positive impact on fraud detection in UK retail companies.
The main theoretical contribution of this study is that it has proposed a new scale for measuring the three constructs of the Fraud Triangle and tested this scale in the context of the UK retail industry. The main empirical contribution is that the factors of fraud detection and prevention have been demonstrated not only for publicly listed companies often studied in the past but also in the context of small private firms, for which the secondary data was not available and primary data was collected. The main methodological contribution of this thesis is that it combines quantitative techniques such as SEM and regression analysis with qualitative thematic analysis to examine the relationships between the constructs of the Fraud Triangle and the fraud occurrence on a deeper level.
