Title: The Relationship between Abnormal Audit Fees and Audit Tenure with Audit Quality

Author: Heny Dewi Ratnasari

Student ID: 041624253040

Study Program: Master of Accounting

Year of Publication: 2021

Abstract:

This study aims to obtain empirical evidence regarding the relationship between abnormal audit fees and audit tenure on audit quality. Data collection was conducted using a purposive sampling, resulting in a final sample of 414 manufacturing sector companies listed on the Indonesia Stock Exchange during the 2013–2018 period. Audit quality was measured using discretionary accruals and real earnings management. The results of multiple linear regression tests with discretionary accruals indicate a positive relationship between positive abnormal audit fees and discretionary accruals, indicating economic dependence between auditors and clients when clients pay high audit fees, thus enabling earnings management practices that reduce audit quality. Meanwhile, on the real earnings management, the results show a positive relationship between abnormal audit fees and real earnings management (abnormal operating cash flow, abnormal production, and aggregate REM). In addition, the audit tenure shows a negative relationship to audit quality.

Keywords: abnormal audit fees, audit tenure, discretionary accrual, real earnings management

Read more: https://doi.org/10.36555/jasa.v5i1.1514