Earnings Management and Audit Quality in Indonesian IPO Companies
Abstract
Wulandari, Adistyana Dyah (2006). Earnings Management and Audit Quality in
Indonesian IPO Companies. Yogyakarta. International Program. Faculty of
Economics. Islamic University of Indonesia.
This paper examines the relationship between audit quality (as measured by
auditor size and industry specialization) and earnings management (as measured by
unexpected accruals) in Indonesian IPO companies. Prior studies done by Zhou and
Elder (2003) prove that big five auditors and industry specialist auditors wrotrain
earnings management for IPO firms inthe US. The purpose ofthis study istoprovide
further evidence for Indonesian case.
Data employed in this research is secondary data. The population of this
research is all non-manufacturing and manufacturing companies listed in Jakarta
Stock Exchange (JSX) which do an IPO process through out 1996-2004. The data
period is pooled time series data. Some data are insufficient, incorrect, and
incomplete. Final Researchobject is 55 data.
The result of this research shows that industry specialist auditors have
significant influence to less earnings management inthe IPO year in Indonesia. This
evidence shows that in Indonesia, industry specialist auditors are better organized as a
prominent element ofaudit quality by the IPO companies inIndonesia.
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