Effect of Audit Quality on Earnings Management in Transportation Sub-Sector Companies Registered in the Indonesia Stock Exchange for the Period of 2016-2019

Abstract

This study aims to examine the effect of audit quality on earnings management. The earnings
management discussed in the analysis is a dependent variable measured with the
Discretionary Accruals value. Additionally, the dependent variable is the audit quality
evaluated with Public Accounting Firm (KAP, Kantor Akuntan Publik) to be a big-four and a
non-big-four as well as auditor industry specialization. The data used are the secondary data
from the financial statements of the companies registered in the Indonesia Stock Exchange
throughout 2016 – 2019. The study manages to collect 89 data samples using a purposive
sampling method. The data are analyzed using multiple linear regression assessment. The
analysis result shows that there is no significant effect between the audit quality variable
represented by the size indicator of KAP and Auditor Industry Specialization towards
earnings management.