AUDITOR QUALITY AND ITS INFLUENCE TO FIRM VALUE AND EARNINGS PERSISTENCE

Abstract

This study was to analyse the effect of auditor quality on firm’s value and earning persistence in public manufacturing companies listed on the Indonesian Stock Exchange. Base in signalling Theory, qualified accounting information used as a reference for stakeholders in making decision. Thus, audit serves to reduce agency costs by providing quality assurance of financial accounting information and firm’s value. Hence, it can increase the accuracy and efficiency of contracts which are based on the financial statements between principals and agents.
This study used financial report data from the Indonesia Stock Exchange from 2006 to 2010. The secondary data are Financial report. Regression analysis was used to solve the research problem about weather audit quality affects firm’s values and earning persistence. The results showed that auditor quality had a significantly positive influence on firm’s value but Moreover auditor quality had no influence on earnings persistence. Thus it is mean that auditor do not determine the earning number, because they only want to asses weather the financial report have presented in accordance to Generally Accepted Accounting Principled

Keywords: agency theory, signalling theory, earning persistence, auditor quality, firm’s value, public accounting firm

Artikel tersebut telah dipublikasikan dalam Proceeding of the Universal Academic Cluster International Summe Conference in Bangkok 2016. Download fullteks disini.

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