EXTERNAL AUDITOR APPOINTMENT IN INDONESIAN STATE-OWNED ENTERPRISES: THE ROLE OF POLITICAL CONNECTION AND ACCOUNTING IRREGULARITIES

Authors

  • Annastasia Joceline Accounting Department, School of Accounting, Bina Nusantara University, Jakarta, Indonesia, 11480
  • Gatot Soepriyanto Accounting Department, School of Accounting, Bina Nusantara University, Jakarta, Indonesia, 11480

DOI:

https://doi.org/10.21512/jafa.v10i1.8904

Keywords:

Political Connection, Accounting Irregularities, Auditor Choice, Auditor Switching, State-Owned Enterprises

Abstract

This research investigates how political connections and accounting irregularities affect the auditor appointment decision in Indonesian state-owned enterprises. This research considers auditor choice and switching decisions as its dependent variables. Political connection is calculated as a percentage of the firm's board of directors and commissioners with political connections. Accounting irregularities are calculated with Beneish M-Score. Employing the 235 firm-year observations from 2014 to 2018 using logit regression, this research documents the following results: (1) Political connection has a significant negative influence on auditor choice. (2) Accounting irregularities have a weak significant negative influence on auditor choice. (3) Political connection has no significant influence on auditor switching. (4) Accounting irregularities have no significant influence on auditor switching.

Dimensions

Plum Analytics

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Published

2023-06-27
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