PENGARUH KUALITAS AUDIT DALAM MENDETEKSI EARNINGS MANAGEMENT DENGAN MENGGUNAKAN PENDEKATAN DISCRETIONARY REVENUE

Abstract

This study examines the effect of audit quality to the earnings management by using discretionary revenue model by Stubben 2010. In the prior literatures, earnings management is captured by discretionary accrual that are estimated using a cross sectional version of the Jones 1991 model. Some studies indicate that revenue models are less biased, better specified and more powerful than commonly used accrual models. Two proxies used for audit quality are public accounting firm industry specialization and audit firm size. The analysis method used is Ordinary Least Square, t-test and F-test. The sample of this empirical study is 163 companies listed in Indonesian Stock Exchange in the period of 2007-2012 except financial industries such as banking, multi-finance and insurance. Purposive sampling technique was applied for selecting the required sample for this study. The result of this study showed that public accounting firm industry specialization and audit firm size as the proxies of audit quality do not affect earnings management significantly by using discretionary revenue model.
Keywords: audit quality, industry specialization, audit firm size, earnings management