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Mediating Effect of Audit Quality in Relationship Between Auditor Ethics and Litigation: An Empirical Study

Author

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  • Andi Agus
  • Imam Ghozali

Abstract

Purpose: This paper attempts to empirically examine the effect of auditor’s ethics on litigation of audit results by using mediating variables of auditor quality. Design/methodology/approach: This study considers a sample of 220 auditors working in public accounting firms using random survey methods. The main technique for analyzing data is Structural Equation Modeling. Findings: The test results show that the auditor ethics has a positive and significant effect on audit quality, while auditor quality has a negative and significant effect on auditor’s litigation. Practical implications: The findings emphasize the importance of the ethical aspects of auditors’ in conducting their tasks. Originality/value: Audit quality in this study is able to strengthen the influence of auditor’s ethics on auditor’s litigation.

Suggested Citation

  • Andi Agus & Imam Ghozali, 2019. "Mediating Effect of Audit Quality in Relationship Between Auditor Ethics and Litigation: An Empirical Study," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 91-100.
    • Handle: RePEc:ers:ijebaa:v:vii:y:2019:i:2:p:91-100
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    References listed on IDEAS

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    1. Yonathan Sunyoto & Imam Ghozali & Agus Purwanto, 2017. "Analysis of Auditor Performance by Using Covariance Based Structural Equation Modeling: A Study of Public Accounting Firms in Indonesia," European Research Studies Journal, European Research Studies Journal, vol. 0(3A), pages 524-537.
    2. Lennox, Clive & Li, Bing, 2012. "The consequences of protecting audit partners’ personal assets from the threat of liability," Journal of Accounting and Economics, Elsevier, vol. 54(2), pages 154-173.
    3. Jan Barton, 2005. "Who Cares about Auditor Reputation?," Contemporary Accounting Research, John Wiley & Sons, vol. 22(3), pages 549-586, September.
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    Cited by:

    1. Andi Agus & Nurna Aziza, 2020. "The Effects of Ethical Factors in Financial Statement Examination: Ethical Framework of the Input Process Output (IPO) Model in Auditing System Basis," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(2), pages 136-145, April.
    2. Pilipus Ramandei & Abdul Rohman & Dwi Ratmono & Imam Ghozali, 2020. "Interactions of Financial Assistance and Financial Reporting Competency: Evidence From Local Government in Papua and West Papua Indonesia," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(1), pages 1-12, January.

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    More about this item

    Keywords

    Ethics; audit quality; litigation.;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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