Audit Quality dan Value Relevance of Accounting Information
Abstract
Users of financial reports need relevant information as a basis for making decisions. The existence of an auditor helps investors in assessing the quality of accounting information. The research aims to examine the quality of audit reports as proxied by the size of the public accounting firm and audit opinions on the value relevance of accounting information. The research population is all sectors of business entities registered on the IDX in the 2018-2021 period. A total of 1,480 observations were used as samples in the research. Researchers use a fixed effect model in a panel data structure to test hypotheses. The research results show that auditor size increases the relevance of earnings value, but reduces the relevance of book value. Meanwhile, the audit opinion was found not to affect the relevance of accounting information. The research findings are interesting because audit opinions provided by Big 4 auditors increase the relevance of book value. This research is expected to help investors consider audit quality as an integral part of fundamental analysis, as well as contribute to the development of the topic of value relevance of accounting information and audit quality.
Keywords: Audit, Financial Statement, Value Relevance
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References
Abdollahi, A., Rezaei Pitenoei, Y., & Safari Gerayli, M. (2020a). Auditor’s report, auditor’s size and value relevance of accounting information. Journal of Applied Accounting Research, 21(4), 721–739. https://doi.org/10.1108/JAAR-11-2019-0153
Abdollahi, A., Rezaei Pitenoei, Y., & Safari Gerayli, M. (2020b). Auditor’s report, auditor’s size and value relevance of accounting information. Journal of Applied Accounting Research, 21(4), 721–739. https://doi.org/10.1108/JAAR-11-2019-0153
Abubakar, A., Chechet, I. L., Badara, M. S., & Nasiru, Y. (2022). Value Relevance of Earnings and Book Value: A Comparative Analysis Between Big 4 and Non-Big4 Audited Listed Firms in Nigeria. Gusau Journal of Accounting and Finance, 3(1), 136–144.
Ahmadi, A., & Bouri, A. (2018). The accounting value relevance of earnings and book value: Tunisian banks and financial institutions. International Journal of Law and Management, 60(2), 342–354. https://doi.org/10.1108/IJLMA-11-2016-0131
Al-dhamari, R. A. A., & Chandren, S. (2017). Audit Partners Gender , Auditor Quality and Clients Value Relevance. 1–16. https://doi.org/10.1177/0972150917697747
Alfraih, M. M. (2016). The role of audit quality in firm valuation Evidence from an emerging capital market with a joint audit requirement. International Journal of Law and Management, 58(5), 575–598. https://doi.org/10.1108/IJLMA-09-2015-0049
Ali, C. Ben. (2020). Agency Theory and Fraud. In Corporate Fraud Exposed: A Comprehensive and Holistic Approach.
Awuye, I. S. (2022). The impact of audit quality on earnings management : Evidence from France To cite this version : HAL Id : hal-03824396 The impact of audit quality on earnings management : Evidence from France. Journal of Accounting and Taxation, 14(1), 52–63. https://doi.org/10.5897/JAT2021.0514
Badlaoui, A. El, & Cherqaoui, M. (2023). Value relevance of audit opinions in an emerging market : evidence from Morocco. https://doi.org/10.1108/JFRA-03-2023-0144
Bahreini, V., Baghbani, M., & Bahreini, R. (2013). Analysis between financial leverage with the stock price and the operational performance of the accepted companies in Tehran ’ s stock market. European Online Journal of Natural and Social Sciences, 2(3), 25–34.
Baiardo, D., Lourenço, I., & Black, E. L. (2022). Financial distress , earnings management and Big 4 auditors in emerging markets. Accounting Research Journal, 35(5), 660–675. https://doi.org/10.1108/ARJ-06-2021-0165
Bowerman, S., & Sharma, U. (2016). The Effect of Corporate Social Responsibility Disclosures on Share Prices in Japan and UK. Corporate Ownership & Control, 13(2).
Cai, J., & Zhang, Z. (2011). Leverage change , debt overhang , and stock prices. Journal of Corporate Finance, 17(3), 391–402. https://doi.org/10.1016/j.jcorpfin.2010.12.003
Chen, B., Kurt, A. C., & Wang, I. G. (2020). Accounting comparability and the value relevance of earnings and book value. Journal of Corporate Accounting and Finance, 31(4), 82–98. https://doi.org/10.1002/jcaf.22459
Chowdhury, S. N., & Eliwa, Y. (2021). The impact of audit quality on real earnings management in the UK context. International Journal of Accounting & Information Management, 29(3), 368–391. https://doi.org/10.1108/IJAIM-10-2020-0156
Dewan Standar Profesional Akuntan Publik. (2021). Standar Audit 200: Tujuan Keseluruahan Auditor Independen dan Pelaksanaan Audit Berdasarkan Standar Audit (Vol. 200, Issue Revisi). IAPI.
Ertugrul, M. (2020). How does leverage affect the value relevance ? Evidence from Turkey. Spanish Journal of FInance and Accounting. https://doi.org/10.1080/02102412.2020.1786946
Fama, E. F. (1970). American Finance Association Efficient Capital Markets : A Review of Theory and Empirical Work. Efficient Capital Markets: A Review of Theory and Empirical Work, 25(2), 383–417.
Flees, R. B. (2023). The impact of quali fi ed audit opinion on stock returns : an empirical study at Amman stock exchange. Journal of Financial Reporting and Accounting, 21(3), 633–653. https://doi.org/10.1108/JFRA-02-2021-0056
Francis, J., & Schipper, K. (1999). Have Financial Statements Lost Their Relevance ? Journal of Accounting Research, 37(2), 319–352.
Ghozali, I. (2018). Aplikasi Analisis Multivariate dengan Program IBM SPSS 25. Badan Penerbit Universitas Diponegoro.
Gozali, J. L., & Sulistiawan, D. (2021). Mampukah Keberadaan KAP Besar Meningkatkan Relevansi Nilai Laba dan Pendapatan Komprehensif Lain? Jurnal Akuntansi Keuangan Dan Bisnis, 14(1), 163–170.
Hichri, A. (2023). Audit quality , value relevance , integrated reporting and the moderating role of business ethics : evidence from European ESG fi rms. Review of Accounting and Finance. https://doi.org/10.1108/RAF-03-2023-0073
Hussainey, K. (2009). The impact of audit quality on earnings predictability. Managerial Auditing Journal, 24(4), 340–351. https://doi.org/10.1108/02686900910948189
Hutauruk, C., & Fitri Puspa, D. (2023). INTELLECTUAL CAPITAL, CORPORATE GOVERNANCE, PERSISTENSI LABA DAN ASIMETRI INFORMASI. 18(1). www.idx.co.id.
Ianniello, G., & Galloppo, G. (2015). Stock market reaction to auditor opinions – Italian evidence. Managerial Auditing Journal, 30(6), 610–632. https://doi.org/10.1108/MAJ-06-2014-1045
Ikatan Akuntan Indonesia. (2022). Kerangka Konseptual Pelaporan Keuangan (KKPK). Dewan Standar Akuntansi Keuangan Ikatan Akuntan Indonesia.
Imen, F., & Anis, J. (2020). The moderating role of audit quality on the relationship between auditor reporting and earnings management : empirical evidence from Tunisia. EuroMed Journal of Business, 16(4), 416–430. https://doi.org/10.1108/EMJB-03-2020-0024
Le, B., & Moore, P. H. (2023). The impact of audit quality on earnings management and cost of equity capital : evidence from a developing market. Journal of Financial Reporting and Accounting, 21(3), 695–728. https://doi.org/10.1108/JFRA-09-2021-0284
Lee, H., & Lee, H. (2013). Do Big 4 audit firms improve the value relevance of earnings and equity ? 28(7), 628–646. https://doi.org/10.1108/MAJ-07-2012-0728
Lopes, A. P. (2018). Audit quality and earnings management : evidence from Portugal Audit Quality and Earnings Management : Evidence from Portugal. Athens Journal of Business & Economics, 4(2), 179–192.
Mehnaz, L., Rahman, A., & Kabir, H. (2022). Relevance of supplementary fair value disclosures under market uncertainty : e ff ects on audit fees and investors ’ pricing. Managerial Auditing Journal, 37(7), 819–849. https://doi.org/10.1108/MAJ-07-2021-3263
Mustafa, A. S. (2021). The Moderating role of Dual Class Share and Firm Size on Value Relevance of Accounting Information. Academy of Accounting and Financial Studies Journal, 25(6), 1–6.
Ohlson, J. A. (1995). Earnings, Book Values, and Dividends in Equity Valuation. Contemporary Accounting Research, 11(2), 661–687.
Rahman, S.-, Chen, S., Al-faryan, M. A. S., Ahmad, I., Hussain, R. Y., & Saud, S. (2023). Audit services and financial reporting quality : The role of accounting expertise auditors Audit services and financial reporting quality : The role of accounting expertise auditors. Cogent Business & Management, 10(1). https://doi.org/10.1080/23311975.2022.2164142
Saji, T. G. (2021). Asymmetric financial reporting quality and firm size: conditional evidence from an emerging market. Journal of Applied Accounting Research. https://doi.org/10.1108/JAAR-10-2021-0264
Scott, W. R. (2015). FINANCIAL ACCOUNTING THEORY Seventh Edition. www.pearsoncanada.ca.
Shuraki, M. G., Pourheidari, O., & Azizkhani, M. (2020). Accounting comparability , financial reporting quality and audit opinions : evidence from Iran. Asian Review of Accounting, 29(1), 42–60. https://doi.org/10.1108/ARA-06-2020-0087
Siagian, V. (2023). The effect of auditor’s reputation and auditor’s opinion on stock prices: Evidence from IDX main board index. The Indonesian Accounting Review, 13(2), 221–232. https://doi.org/10.14414/tiar.v13i2.3345
Thompson, E. K., Ashimwe, O., Buertey, S., & Kim, S. (2022). The value relevance of sustainability reporting : does assurance and the type of assurer matter ? https://doi.org/10.1108/SAMPJ-08-2021-0329
Wintari, T., & Panggabean, R. R. (2020). Audit Partner Gender, Audit Quality, Audit Report, Net Income, Book Value of Equity and Value Relevance. Proceeding the 1st International Congress on Regional Economic Development, Information Technology, and Sustainable Business. http://conference.feb.uns.ac.id/2020www.conference.feb.uns.ac.id/2020
Yokoyama, K. Y., Baioco, V. G., Sobrinho, W. B. R., & Neto, A. S. (2015). The Influence of Company Size on Accounting Information : Evidence in Large Caps and Small Caps Companies Listed on BM & FBovespa.
Abdollahi, A., Rezaei Pitenoei, Y., & Safari Gerayli, M. (2020b). Auditor’s report, auditor’s size and value relevance of accounting information. Journal of Applied Accounting Research, 21(4), 721–739. https://doi.org/10.1108/JAAR-11-2019-0153
Abubakar, A., Chechet, I. L., Badara, M. S., & Nasiru, Y. (2022). Value Relevance of Earnings and Book Value: A Comparative Analysis Between Big 4 and Non-Big4 Audited Listed Firms in Nigeria. Gusau Journal of Accounting and Finance, 3(1), 136–144.
Ahmadi, A., & Bouri, A. (2018). The accounting value relevance of earnings and book value: Tunisian banks and financial institutions. International Journal of Law and Management, 60(2), 342–354. https://doi.org/10.1108/IJLMA-11-2016-0131
Al-dhamari, R. A. A., & Chandren, S. (2017). Audit Partners Gender , Auditor Quality and Clients Value Relevance. 1–16. https://doi.org/10.1177/0972150917697747
Alfraih, M. M. (2016). The role of audit quality in firm valuation Evidence from an emerging capital market with a joint audit requirement. International Journal of Law and Management, 58(5), 575–598. https://doi.org/10.1108/IJLMA-09-2015-0049
Ali, C. Ben. (2020). Agency Theory and Fraud. In Corporate Fraud Exposed: A Comprehensive and Holistic Approach.
Awuye, I. S. (2022). The impact of audit quality on earnings management : Evidence from France To cite this version : HAL Id : hal-03824396 The impact of audit quality on earnings management : Evidence from France. Journal of Accounting and Taxation, 14(1), 52–63. https://doi.org/10.5897/JAT2021.0514
Badlaoui, A. El, & Cherqaoui, M. (2023). Value relevance of audit opinions in an emerging market : evidence from Morocco. https://doi.org/10.1108/JFRA-03-2023-0144
Bahreini, V., Baghbani, M., & Bahreini, R. (2013). Analysis between financial leverage with the stock price and the operational performance of the accepted companies in Tehran ’ s stock market. European Online Journal of Natural and Social Sciences, 2(3), 25–34.
Baiardo, D., Lourenço, I., & Black, E. L. (2022). Financial distress , earnings management and Big 4 auditors in emerging markets. Accounting Research Journal, 35(5), 660–675. https://doi.org/10.1108/ARJ-06-2021-0165
Bowerman, S., & Sharma, U. (2016). The Effect of Corporate Social Responsibility Disclosures on Share Prices in Japan and UK. Corporate Ownership & Control, 13(2).
Cai, J., & Zhang, Z. (2011). Leverage change , debt overhang , and stock prices. Journal of Corporate Finance, 17(3), 391–402. https://doi.org/10.1016/j.jcorpfin.2010.12.003
Chen, B., Kurt, A. C., & Wang, I. G. (2020). Accounting comparability and the value relevance of earnings and book value. Journal of Corporate Accounting and Finance, 31(4), 82–98. https://doi.org/10.1002/jcaf.22459
Chowdhury, S. N., & Eliwa, Y. (2021). The impact of audit quality on real earnings management in the UK context. International Journal of Accounting & Information Management, 29(3), 368–391. https://doi.org/10.1108/IJAIM-10-2020-0156
Dewan Standar Profesional Akuntan Publik. (2021). Standar Audit 200: Tujuan Keseluruahan Auditor Independen dan Pelaksanaan Audit Berdasarkan Standar Audit (Vol. 200, Issue Revisi). IAPI.
Ertugrul, M. (2020). How does leverage affect the value relevance ? Evidence from Turkey. Spanish Journal of FInance and Accounting. https://doi.org/10.1080/02102412.2020.1786946
Fama, E. F. (1970). American Finance Association Efficient Capital Markets : A Review of Theory and Empirical Work. Efficient Capital Markets: A Review of Theory and Empirical Work, 25(2), 383–417.
Flees, R. B. (2023). The impact of quali fi ed audit opinion on stock returns : an empirical study at Amman stock exchange. Journal of Financial Reporting and Accounting, 21(3), 633–653. https://doi.org/10.1108/JFRA-02-2021-0056
Francis, J., & Schipper, K. (1999). Have Financial Statements Lost Their Relevance ? Journal of Accounting Research, 37(2), 319–352.
Ghozali, I. (2018). Aplikasi Analisis Multivariate dengan Program IBM SPSS 25. Badan Penerbit Universitas Diponegoro.
Gozali, J. L., & Sulistiawan, D. (2021). Mampukah Keberadaan KAP Besar Meningkatkan Relevansi Nilai Laba dan Pendapatan Komprehensif Lain? Jurnal Akuntansi Keuangan Dan Bisnis, 14(1), 163–170.
Hichri, A. (2023). Audit quality , value relevance , integrated reporting and the moderating role of business ethics : evidence from European ESG fi rms. Review of Accounting and Finance. https://doi.org/10.1108/RAF-03-2023-0073
Hussainey, K. (2009). The impact of audit quality on earnings predictability. Managerial Auditing Journal, 24(4), 340–351. https://doi.org/10.1108/02686900910948189
Hutauruk, C., & Fitri Puspa, D. (2023). INTELLECTUAL CAPITAL, CORPORATE GOVERNANCE, PERSISTENSI LABA DAN ASIMETRI INFORMASI. 18(1). www.idx.co.id.
Ianniello, G., & Galloppo, G. (2015). Stock market reaction to auditor opinions – Italian evidence. Managerial Auditing Journal, 30(6), 610–632. https://doi.org/10.1108/MAJ-06-2014-1045
Ikatan Akuntan Indonesia. (2022). Kerangka Konseptual Pelaporan Keuangan (KKPK). Dewan Standar Akuntansi Keuangan Ikatan Akuntan Indonesia.
Imen, F., & Anis, J. (2020). The moderating role of audit quality on the relationship between auditor reporting and earnings management : empirical evidence from Tunisia. EuroMed Journal of Business, 16(4), 416–430. https://doi.org/10.1108/EMJB-03-2020-0024
Le, B., & Moore, P. H. (2023). The impact of audit quality on earnings management and cost of equity capital : evidence from a developing market. Journal of Financial Reporting and Accounting, 21(3), 695–728. https://doi.org/10.1108/JFRA-09-2021-0284
Lee, H., & Lee, H. (2013). Do Big 4 audit firms improve the value relevance of earnings and equity ? 28(7), 628–646. https://doi.org/10.1108/MAJ-07-2012-0728
Lopes, A. P. (2018). Audit quality and earnings management : evidence from Portugal Audit Quality and Earnings Management : Evidence from Portugal. Athens Journal of Business & Economics, 4(2), 179–192.
Mehnaz, L., Rahman, A., & Kabir, H. (2022). Relevance of supplementary fair value disclosures under market uncertainty : e ff ects on audit fees and investors ’ pricing. Managerial Auditing Journal, 37(7), 819–849. https://doi.org/10.1108/MAJ-07-2021-3263
Mustafa, A. S. (2021). The Moderating role of Dual Class Share and Firm Size on Value Relevance of Accounting Information. Academy of Accounting and Financial Studies Journal, 25(6), 1–6.
Ohlson, J. A. (1995). Earnings, Book Values, and Dividends in Equity Valuation. Contemporary Accounting Research, 11(2), 661–687.
Rahman, S.-, Chen, S., Al-faryan, M. A. S., Ahmad, I., Hussain, R. Y., & Saud, S. (2023). Audit services and financial reporting quality : The role of accounting expertise auditors Audit services and financial reporting quality : The role of accounting expertise auditors. Cogent Business & Management, 10(1). https://doi.org/10.1080/23311975.2022.2164142
Saji, T. G. (2021). Asymmetric financial reporting quality and firm size: conditional evidence from an emerging market. Journal of Applied Accounting Research. https://doi.org/10.1108/JAAR-10-2021-0264
Scott, W. R. (2015). FINANCIAL ACCOUNTING THEORY Seventh Edition. www.pearsoncanada.ca.
Shuraki, M. G., Pourheidari, O., & Azizkhani, M. (2020). Accounting comparability , financial reporting quality and audit opinions : evidence from Iran. Asian Review of Accounting, 29(1), 42–60. https://doi.org/10.1108/ARA-06-2020-0087
Siagian, V. (2023). The effect of auditor’s reputation and auditor’s opinion on stock prices: Evidence from IDX main board index. The Indonesian Accounting Review, 13(2), 221–232. https://doi.org/10.14414/tiar.v13i2.3345
Thompson, E. K., Ashimwe, O., Buertey, S., & Kim, S. (2022). The value relevance of sustainability reporting : does assurance and the type of assurer matter ? https://doi.org/10.1108/SAMPJ-08-2021-0329
Wintari, T., & Panggabean, R. R. (2020). Audit Partner Gender, Audit Quality, Audit Report, Net Income, Book Value of Equity and Value Relevance. Proceeding the 1st International Congress on Regional Economic Development, Information Technology, and Sustainable Business. http://conference.feb.uns.ac.id/2020www.conference.feb.uns.ac.id/2020
Yokoyama, K. Y., Baioco, V. G., Sobrinho, W. B. R., & Neto, A. S. (2015). The Influence of Company Size on Accounting Information : Evidence in Large Caps and Small Caps Companies Listed on BM & FBovespa.
Published
2023-12-30
How to Cite
SETIAWAN, Yan Christianto; METTAN, Santho Vlennery.
Audit Quality dan Value Relevance of Accounting Information.
E-Jurnal Akuntansi, [S.l.], v. 33, n. 12, p. 3117-3132, dec. 2023.
ISSN 2302-8556.
Available at: <https://ojs.unud.ac.id/index.php/akuntansi/article/view/109301>. Date accessed: 10 may 2024.
doi: https://doi.org/10.24843/EJA.2023.v33.i12.p01.
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