THE EFFECT OF AUDIT OPINION, FINANCIAL DISTRESS, AUDIT DELAY, CHANGE OF MANAGEMENT ON AUDITOR SWITCHING

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Keywords:

Auditor switching, audit opinion, financial distress, audit delay, change management, logistic regression

Abstract

There are several factors responsible for shaping the decision of changing auditors besides mandatory regulation. In this paper, the author contributes to the existing body of literature by analyzing the impact of change in management, audit opinion, audit delays and financial distress on the decision of switching auditors. The analysis is carried out in the context of the metal firms listed on the Indonesian stock exchange. Data has been collected against a period of eight years from 2011 to 2018. The sample consists of 88 public manufacturing companies listed on the Indonesian Stock Exchange (IDX). Using logistic regression, the paper highlights the following key findings based on the analysis are as follows. First, audit opinion does not influence auditor switching. Second, financial distress has a negative and significant effect on auditor switching. Third, management change has a positive and significant effect on auditor switching. Finally, audit delays have significant effects on auditor switching. The policy implications and the direction for future research is also provided in the paper

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Published

2021-06-01