Audit firm rotation and audit quality: Comparison before vs after the elimination of audit firm rotation regulations in Indonesia

Inas Aisyah Widyaningsih and Iman Harymawan and Agus Widodo Mardijuwono and Eka Sari Ayuningtyas and Dyah Ayu Larasati (2019) Audit firm rotation and audit quality: Comparison before vs after the elimination of audit firm rotation regulations in Indonesia. Cogent Business and Management, 6 (1). ISSN 18347649

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Abstract

This paper examines whether the changes in audit rotation policy affect the relationship between audit firm rotation and audit quality in Indonesia. This study uses 2,403 observations from 371 firms listed on the IDX for the period 2010-2017. This study uses Ordinary Least Squares regression to test the hypothesis. We find that, in the mandatory audit rotation period (pre-period), there is no significant association between audit rotation and audit quality. Interestingly, we find a positive relationship between audit rotation and audit quality in the voluntary audit rotation (post-period). Our result implies that voluntary audit rotation without any coercive regulation is more effective in improving audit quality. This research provides an insight to policy makers that eliminating the regulation of audit firm rotation is an effective decision to enhance audit quality. © 2019, © 2019 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license.

Item Type: Article
Uncontrolled Keywords: audit, audit firm rotation, audit quality
Subjects: H Social Sciences > HB Economic Theory > HB1-3840 Economic theory. Demography
Divisions: Artikel Ilmiah > SCOPUS INDEXED JOURNAL
Creators:
CreatorsNIM
Inas Aisyah WidyaningsihUNSPECIFIED
Iman HarymawanUNSPECIFIED
Agus Widodo MardijuwonoUNSPECIFIED
Eka Sari AyuningtyasUNSPECIFIED
Dyah Ayu LarasatiUNSPECIFIED
Contributors:
ContributionNameNIDN / NIDK
AuthorUNSPECIFIEDUNSPECIFIED
AuthorUNSPECIFIEDUNSPECIFIED
AuthorUNSPECIFIEDUNSPECIFIED
AuthorUNSPECIFIEDUNSPECIFIED
AuthorUNSPECIFIEDUNSPECIFIED
Depositing User: PPJPI
Date Deposited: 12 Aug 2020 13:31
Last Modified: 12 Aug 2020 13:34
URI: http://repository.unair.ac.id/id/eprint/94562
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