The relationship between audit quality and risk taking toward value creation in Indonesia
Journal of Accounting in Emerging Economies
ISSN: 2042-1168
Article publication date: 3 April 2019
Issue publication date: 23 April 2019
Abstract
Purpose
The purpose of this paper is to evaluate the effect between audit quality and risk taking on value creation.
Design/methodology/approach
Population 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.
Findings
The 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/value
The outcomes of the current study help audit market and capital market in developing nations.
Keywords
Citation
Sri, M. and Solimun, S. (2019), "The relationship between audit quality and risk taking toward value creation in Indonesia", Journal of Accounting in Emerging Economies, Vol. 9 No. 2, pp. 251-267. https://doi.org/10.1108/JAEE-11-2017-0110
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited