The effect of audit opinion, company size, and KAP size on auditor switching

Abstract

Purpose: This study aims to examine how much influence Audit Opinion, Company Size, and Public Accountant Size have on auditor switching in Manufacturing companies included in the Basic Industry and Chemical Sector, which are listed on the Indonesia Stock Exchange (IDX) from 2017 to 2020.

Methods: This study uses a type of causal associative relationship research with a quantitative approach measured using the logistic regression method using E-views 10. The data used in this study are secondary. The sample was taken using a purposive sampling technique with a total of 40 companies from 2017 to 2020.

Findings: The results of this study indicate that audit opinion does not affect auditor turnover. Meanwhile, company size has a significant effect because larger companies tend to choose quality auditors to maintain the credibility of financial statements. On the other hand, the size of the public accounting firm has no significant effect because the decision to change auditors is based more on the company's ability to pay an honorarium, not on the reputation or quality of the auditor

Practical Implications: The results of this study emphasize the importance of companies, especially large ones, in choosing quality auditors to maintain the credibility of financial statements. Companies are advised to consider not only costs but also the auditor's ability to provide high audit quality. In addition, the finding that audit opinion does not affect auditor turnover provides insight that stakeholders should not focus too much on the opinion when making strategic decisions. Better audit practices may increase transparency and stakeholder trust