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Effect of Audit Quality on Earnings Quality: Evidence From Indonesia Stock Exchange

Author

Listed:
  • Sumiadji
  • Grahita Chandrarin
  • Edi Subiyantoro

Abstract

This research was conducted to test the effect of audit quality on earnings quality. Its observed data consisted of 116 annual data of manufacturing companies listed in the Indonesia Stock Exchange within 2011-2014. The proxies of audit quality are auditor size, audit tenure and audit specialization. The earnings quality was formed from the attributes of accrual quality, persistence, predictability, and income smoothing. The analysis techniques for this research involved (1) an confirmatory factor analysis to form the earnings quality and (2) multiple regression analysis to test the effect of the auditor size, audit tenure and audit specialization on earnings quality. Analysis results showed that earnings quality is formed by the attributes of persistence and predictability. Research results showed that auditor size and audit tenure have effect on earning quality, while audit specialization do not.

Suggested Citation

  • Sumiadji & Grahita Chandrarin & Edi Subiyantoro, 2019. "Effect of Audit Quality on Earnings Quality: Evidence From Indonesia Stock Exchange," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(1), pages 86-97, January.
    • Handle: RePEc:jfr:ijfr11:v:10:y:2019:i:1:p:86-97
    DOI: 10.5430/ijfr.v10n1p86
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    References listed on IDEAS

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