Muhammad Ridha Habibi Z, Faisal, Nova Mahendra

The Effect of Audit Opinion, Financial Distress, Company Growth on Audit Switching in Manufacturing Companies Listed on the Indonesia Stock Exchange

Introduction

The effect of audit opinion, financial distress, company growth on audit switching in manufacturing companies listed on the indonesia stock exchange. Investigate how audit opinion, financial distress, and company growth affect audit switching in manufacturing companies on the IDX. Growth shows a significant impact, all variables are significant simultaneously.

Abstract

This study aims to determine the effect of Audit Opinion, Financial Distress, Company Growth on Audit Switching partially and simultaneously in manufacturing companies listed on the Indonesia Stock Exchange (IDX). The population in this study are manufacturing companies listed on the Indonesia Stock Exchange, as many as 177 companies. From the population, selected by purposive sampling technique and obtained as many as 47. The results partially show that opinion has no effect and is not significant, Financial Distress has no and no significant effect on Auditor Switching, while Company Growth has a significant effect on Auditor Switching. The results of the study simultaneously show that Audit Opinion, Financial Distress, Company Growth have a significant effect on Auditor Switching. The coefficient of determination (Nagelkerke's R Square) explains that Auditor Switching can be explained by Audit Opinion, Financial Distress, Company Growth. While the remainder of the Auditor Switching variable can be explained by other variables not examined in this study, such as management turnover, the size of the Public Accounting Firm.

Review

This study investigates a pertinent topic within corporate governance and financial reporting: the determinants of audit switching among manufacturing companies listed on the Indonesia Stock Exchange (IDX). The clear objective is to assess the partial and simultaneous effects of audit opinion, financial distress, and company growth on audit switching. The abstract effectively communicates the scope, employing a purposive sampling technique to select 47 companies from a population of 177 manufacturing firms. A key strength of the reported findings is the identification of company growth as a significant partial determinant and the robust indication that the combined influence of audit opinion, financial distress, and company growth significantly affects audit switching. However, the abstract presents some methodological and empirical ambiguities that warrant further clarification. Most notably, the conflicting findings where audit opinion and financial distress show no partial effect but a significant simultaneous effect alongside company growth on auditor switching create a point of confusion that needs a robust explanation within the main text. This discrepancy might stem from issues such as multicollinearity or complex interactions between variables, which are not elaborated upon. Furthermore, while the mention of "Nagelkerke's R Square" suggests a logistic regression model was likely employed, the abstract lacks specific details on the analytical methods used to establish 'effect' and 'significance.' The actual value of Nagelkerke's R Square, which quantifies the explained variance, is also omitted, hindering a full appreciation of the model's explanatory power. Despite these points for refinement, the study offers valuable insights, particularly regarding the significant role of company growth and the overall combined influence of the investigated factors on audit switching within the Indonesian context. The acknowledgment of other potential explanatory variables, such as management turnover and Public Accounting Firm size, provides clear avenues for future research to build upon these findings. To enhance the study's impact and resolve the noted inconsistencies, the authors should elaborate on the theoretical underpinnings that explain the observed relationships, especially the divergent partial and simultaneous effects. Overall, this research contributes to the understanding of audit market dynamics in emerging economies and lays groundwork for further, more detailed investigations into the complex drivers of audit firm changes.

Full Text

Comments

You need to be logged in to post a comment.