EVILIA MAYASARI SOLIKHA, 041411331073 and Agus Widodo Mardijuwono, Drs., M.Si., Ak (2020) The Relationship between Audit Quality, Earnings and Equity Book Value Relevance. International Journal of Innovation, Creativity and Change, 13 (4). pp. 610-625. ISSN 2201-1315, eISSN: 2201-1323

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Abstract

This study aims to examine the relationship between audit quality, earnings and ‘equity book value relevance’. We use Big 4 and non-Big 4 public accounting firms as our proxy of audit quality. This study uses listed manufacture firms on the Indonesian Stock Exchange for the period between 2014 and 2016, and as a result, we obtain 201 firm-year observations as our final sample. We use ordinary least squares regression as our analysis technique by SPSS 21. The result shows that audit quality has a positive relationship to earnings and to equity book value relevance. This study is adding additional literature for the public accountant profession showing that the difference of value relevance from accounting information between financial report, which audited by Big 4 and non-Big 4. This study shows that audit quality determines the financial report’s information relevance degree that used as input for stakeholders in making decisions.

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