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The impact of audit market concentration on audit quality: evidence from Indonesia

This study examines the impact of audit market concentration on audit quality when regulation about mandatory audit firm rotation are applied in Indonesia. This study used 2,578 firm-years of data from nonfinancial companies listed on the Indonesia Stock Exchange (IDX) during 2008–2015. Audit qualit...

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Main Authors: Mutiara Clarina,, Fitriany Fitriany,
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2019
Online Access:http://journalarticle.ukm.my/14567/1/36897-116424-2-PB.pdf
http://journalarticle.ukm.my/14567/
http://ejournal.ukm.my/pengurusan/issue/view/1231
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spelling my-ukm.journal.145672020-05-06T00:19:43Z http://journalarticle.ukm.my/14567/ The impact of audit market concentration on audit quality: evidence from Indonesia Mutiara Clarina, Fitriany Fitriany, This study examines the impact of audit market concentration on audit quality when regulation about mandatory audit firm rotation are applied in Indonesia. This study used 2,578 firm-years of data from nonfinancial companies listed on the Indonesia Stock Exchange (IDX) during 2008–2015. Audit quality was measured by discretionary accruals and abnormal working capital, and market concentration was calculated by the Herfindahl–Hirschman Index. The study found that market concentration decrease the accrual discreationer and improves audit quality. This outcome is likely because auditors experience in a particular industry have a better understanding of industry risk and will thus undertake better audit planning and procedures that tend to improve audit quality. So, regulators need to encourage public accounting firms to specialise in specific areas and have better knowledge of the industry to make audit quality better. Penerbit Universiti Kebangsaan Malaysia 2019 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/14567/1/36897-116424-2-PB.pdf Mutiara Clarina, and Fitriany Fitriany, (2019) The impact of audit market concentration on audit quality: evidence from Indonesia. Jurnal Pengurusan, 57 . pp. 1-12. ISSN 0127-2713 http://ejournal.ukm.my/pengurusan/issue/view/1231
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description This study examines the impact of audit market concentration on audit quality when regulation about mandatory audit firm rotation are applied in Indonesia. This study used 2,578 firm-years of data from nonfinancial companies listed on the Indonesia Stock Exchange (IDX) during 2008–2015. Audit quality was measured by discretionary accruals and abnormal working capital, and market concentration was calculated by the Herfindahl–Hirschman Index. The study found that market concentration decrease the accrual discreationer and improves audit quality. This outcome is likely because auditors experience in a particular industry have a better understanding of industry risk and will thus undertake better audit planning and procedures that tend to improve audit quality. So, regulators need to encourage public accounting firms to specialise in specific areas and have better knowledge of the industry to make audit quality better.
format Article
author Mutiara Clarina,
Fitriany Fitriany,
spellingShingle Mutiara Clarina,
Fitriany Fitriany,
The impact of audit market concentration on audit quality: evidence from Indonesia
author_facet Mutiara Clarina,
Fitriany Fitriany,
author_sort Mutiara Clarina,
title The impact of audit market concentration on audit quality: evidence from Indonesia
title_short The impact of audit market concentration on audit quality: evidence from Indonesia
title_full The impact of audit market concentration on audit quality: evidence from Indonesia
title_fullStr The impact of audit market concentration on audit quality: evidence from Indonesia
title_full_unstemmed The impact of audit market concentration on audit quality: evidence from Indonesia
title_sort impact of audit market concentration on audit quality: evidence from indonesia
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2019
url http://journalarticle.ukm.my/14567/1/36897-116424-2-PB.pdf
http://journalarticle.ukm.my/14567/
http://ejournal.ukm.my/pengurusan/issue/view/1231
_version_ 1669008486028017664
score 13.211869

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