Does Auditor Industry Expertise Improve Audit Quality In Complex Business Environments?

This study examines the role of specialist auditors in enhancing the quality of financial statements by taking into account industry complexity. The test of hypotheses are conducted in two steps. The first step is to provide evidence that earnings quality, measured by earnings persistent, of firms o...

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Main Authors: Sansaloni Butar-Butar, Stefani Lily Indarto Lily Indarto
Format: Article
Language:Indonesian
Published: Petra Christian University 2018-06-01
Series:Jurnal Akuntansi dan Keuangan
Subjects:
Online Access:http://jurnalakuntansi.petra.ac.id/index.php/aku/article/view/20846
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author Sansaloni Butar-Butar
Stefani Lily Indarto Lily Indarto
author_facet Sansaloni Butar-Butar
Stefani Lily Indarto Lily Indarto
author_sort Sansaloni Butar-Butar
collection DOAJ
description This study examines the role of specialist auditors in enhancing the quality of financial statements by taking into account industry complexity. The test of hypotheses are conducted in two steps. The first step is to provide evidence that earnings quality, measured by earnings persistent, of firms operating in the complex and non-complex industry are different. The second step is to compare the absolute abnormal accruals of companies engaged in the complex industry with those from non-complex industry audited by non-specialist and specialists auditors. Results show: 1) earnings persistence of firms in complex industries are lower than those in non-complex industries. 2) absolute abnormal accruals of firms operating in complex industries are higher than those in non-complex industries regardless industry specialization. Overall, the results suggest that auditor industry expertise does not play a significant role in improving the quality of audited earnings in complex business environ­ment.
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spelling doaj.art-09a2d010da5249b983be30bd0c4bd8712022-12-22T01:13:23ZindPetra Christian UniversityJurnal Akuntansi dan Keuangan1411-02882338-81372018-06-0120111210.9744/jak.20.1.1-1219269Does Auditor Industry Expertise Improve Audit Quality In Complex Business Environments?Sansaloni Butar-Butar0Stefani Lily Indarto Lily Indarto1Faculty of Economics and Business, Soegijapranata Catholic University of Semarang Jl. Pawiyatan Luhur IV/1 Bendan Dhuwur, Semarang 50234Faculty of Economics and Business, Soegijapranata Catholic University of Semarang Jl. Pawiyatan Luhur IV/1 Bendan Dhuwur, Semarang 50234This study examines the role of specialist auditors in enhancing the quality of financial statements by taking into account industry complexity. The test of hypotheses are conducted in two steps. The first step is to provide evidence that earnings quality, measured by earnings persistent, of firms operating in the complex and non-complex industry are different. The second step is to compare the absolute abnormal accruals of companies engaged in the complex industry with those from non-complex industry audited by non-specialist and specialists auditors. Results show: 1) earnings persistence of firms in complex industries are lower than those in non-complex industries. 2) absolute abnormal accruals of firms operating in complex industries are higher than those in non-complex industries regardless industry specialization. Overall, the results suggest that auditor industry expertise does not play a significant role in improving the quality of audited earnings in complex business environ­ment.http://jurnalakuntansi.petra.ac.id/index.php/aku/article/view/20846specialist auditorearnings persistenceindustry complexityfinancial reports
spellingShingle Sansaloni Butar-Butar
Stefani Lily Indarto Lily Indarto
Does Auditor Industry Expertise Improve Audit Quality In Complex Business Environments?
Jurnal Akuntansi dan Keuangan
specialist auditor
earnings persistence
industry complexity
financial reports
title Does Auditor Industry Expertise Improve Audit Quality In Complex Business Environments?
title_full Does Auditor Industry Expertise Improve Audit Quality In Complex Business Environments?
title_fullStr Does Auditor Industry Expertise Improve Audit Quality In Complex Business Environments?
title_full_unstemmed Does Auditor Industry Expertise Improve Audit Quality In Complex Business Environments?
title_short Does Auditor Industry Expertise Improve Audit Quality In Complex Business Environments?
title_sort does auditor industry expertise improve audit quality in complex business environments
topic specialist auditor
earnings persistence
industry complexity
financial reports
url http://jurnalakuntansi.petra.ac.id/index.php/aku/article/view/20846
work_keys_str_mv AT sansalonibutarbutar doesauditorindustryexpertiseimproveauditqualityincomplexbusinessenvironments
AT stefanililyindartolilyindarto doesauditorindustryexpertiseimproveauditqualityincomplexbusinessenvironments