Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The relationship between audit quality and risk taking toward value creation in Indonesia

The relationship between audit quality and risk taking toward value creation in Indonesia The purpose of this paper is to evaluate the effect between audit quality and risk taking on value creation.Design/methodology/approachPopulation under study is companies on the Jakarta Stock Exchange from 2004 to 2015. Considering the limitations, 145 companies studied in this research, which made a sample containing 1,740 company-years. This study is based on the panel data and multivariate regression method. This research uses fixed and random effects to estimate the regression. In this paper, five components of audit quality, including auditor specialization, tenure, audit firm size, ownership concentration and the percentage of unbounded members of the board, are studied.FindingsThe results of this study indicate that among these five components as well as the risk factor, only tenure and ownership concentration have a significant effect on value creation of companies. In other words, both ownership concentration and tenure are positively effective in value creation and other variables have no significant effect on value creation. Besides, none of them could affect the risk taking on value creation.Originality/valueThe outcomes of the current study help audit market and capital market in developing nations. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting in Emerging Economies Emerald Publishing

The relationship between audit quality and risk taking toward value creation in Indonesia

Loading next page...
 
/lp/emerald-publishing/the-relationship-between-audit-quality-and-risk-taking-toward-value-0ZSieD8Xn9
Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2042-1168
DOI
10.1108/jaee-11-2017-0110
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to evaluate the effect between audit quality and risk taking on value creation.Design/methodology/approachPopulation under study is companies on the Jakarta Stock Exchange from 2004 to 2015. Considering the limitations, 145 companies studied in this research, which made a sample containing 1,740 company-years. This study is based on the panel data and multivariate regression method. This research uses fixed and random effects to estimate the regression. In this paper, five components of audit quality, including auditor specialization, tenure, audit firm size, ownership concentration and the percentage of unbounded members of the board, are studied.FindingsThe results of this study indicate that among these five components as well as the risk factor, only tenure and ownership concentration have a significant effect on value creation of companies. In other words, both ownership concentration and tenure are positively effective in value creation and other variables have no significant effect on value creation. Besides, none of them could affect the risk taking on value creation.Originality/valueThe outcomes of the current study help audit market and capital market in developing nations.

Journal

Journal of Accounting in Emerging EconomiesEmerald Publishing

Published: Apr 23, 2019

Keywords: Value creation; Audit quality; Risk taking

References