Corporate Governance, Ownership Concentration and Audit Quality

Corporate Governance, Ownership Concentration and Audit Quality

  • Zein Septa Fachriza , Universitas Airlangga. Indonesia
  • Agus Widodo Mardijuwono , Universitas Airlangga. Indonesia

Keywords:

Corporate Governance, Audit Quality, Ownership Concentration

Abstract

This study aims to analyse the relationship between corporate governance and audit quality with ownership concentration as a moderating variable in manufacturing companies. The study’s sample population comprised of manufacturing companies listed on the Indonesia Stock Exchange between 2016 and 2018. The study utilised secondary data extracted from the annual financial statements of the listed companies containing information about share ownership, auditor details, and corporate governance. The purposive sampling technique was applied with several criteria to determine the final sample of 289 listed companies. IBM’s Statistical Package for the Social Sciences (SPSS) v.20 was utilised for the data analysis, and logistic regression was used to test the hypotheses. The results showed that the independent commissioner had a significant negative influence on the audit quality, and the existence of the audit committee was not related to audit quality. However, ownership concentration was found to moderate the relationship between independent commissioners on the board and audit quality. This study presents the following implications for the management of companies where independent commissioners should be engaged to ensure that internal corporate governance is upheld and that the board does not necessarily need to engage with Big4 audit and accounting firms.

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