JRSSEM 2021, Vol. 01, No. 2, 130 – 145
E-ISSN: 2807-6311, P-ISSN: 2807-6494
DOI : 10.36418/jrssem.v1i2.14 https://jrssem.publikasiindonesia.id/index.php/jrssem/index
THE EFFECT OF INSTITUTIONAL OWNERSHIP, AUDIT
OPINION, KAP REPUTATION, MANAGEMENT CHANGES
AND AUDIT DELAY ON AUDITOR SWITCHING
Keumala Hayati
1
Junianto Sihotang
2*
Apridita Lubis
3
Dinamis Halawa
4
1,2,3,4
Prima Indonesia University, Indonesia
e-mail: j[email protected]
1
*Correspondence: Juniantosihotang2[email protected]
Submitted: 17 September 2021, Revised: 23 September 2021, Accepted: 27 September 2021
Abstract. This study aims to determine the effect of institutional ownership, audit opinion, hood
reputation, management turnover, and audit delay on auditor switching in manufacturing
companies on the IDX in 2017-2020. This research is quantitative descriptive. The population in this
study are manufacturing companies listed on the Indonesia Stock Exchange in 2017-2020. This
sampling used the purposive sampling method with the number of samples obtained as many as
123 companies. The data analysis technique used is logistic regression analysis (logistic regression).
The study results show that institutional ownership, reputation, and audit delay partially have a
significant effect on auditor switching. In contrast, audit opinion and management change partially
have no considerable impact on auditor switching. However, simultaneously institutional
ownership, audit opinion, hood reputation, management turnover, and audit delay significantly
affect auditor switching.
Keywords: institutional ownership; audit opinion; KAP reputation; management change; audit
delay auditor switching.
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INTRODUCTION
Auditor switching is the change of
auditors, and Public Accounting Firms
(KAP) carried out by the client company.
Auditor switching is crucial for a company
because it can overcome the emergence of
declining audit quality due to the long
relationship between the auditor and the
client company (Sari et al., 2018). Auditor
switching is mandatory or voluntary.
In Indonesia, the phenomenon of
auditor switching has occurred in the last
three years from mining sector companies
listed on the Indonesia Stock Exchange
(IDX), namely in 2015 there were 32
companies, in 2016 there were 40
companies, and in 2017 there were 40
companies. While companies that changed
auditors in 2015 were 11 companies, in
2016, there were five companies. In 2017
eight companies changed auditors. In 2015
there were ten companies; in 2016, there
were eight companies; in 2017, there were
five companies (Hestyaningsih et al., 2020).
According to the Minister of Finance
Regulation Number 17/PMK.01/2008
concerning “Public Accountant Services.”
This regulation stipulates that the provision
of general audit services on financial
statements of an entity is carried out by a
Public Accounting Firm for a maximum of
six consecutive financial years and a public
accountant for a maximum of three
consecutive financial years (Susan &
Trisnawati, 2011). Several factors influence
auditor switching, including institutional
ownership, audit opinion, reputation,
management change, and audit delay.
The first factor affecting auditor
switching is institutional ownership.
Institutional ownership is ownership of
company shares owned by institutional
investors. According to (Sutedi, 2012)
institutional investors include banks,
insurance companies, pension funds,
investment companies, and other
institutions, stating that the increase in
demand for audit quality is determined by
institutional share ownership. This impetus
has led to a request for better quality
auditors, resulting in auditor switching
Rahmawati, 2011 in (Robbitasari &
Wiratmaja, 2013).
The second factor that influences
auditor switching is audit opinion. An audit
opinion is a statement of opinion expressed
by an auditor to assess the fairness of the
audited financial statements. The
statement of opinion can be in the form of
an unqualified opinion or in addition to an
unqualified opinion (Putra & Suryanawa,
2016).
The third factor that influences auditor
switching is the reputation of the hood.
According to the Minister of Finance
Decree No. 70/KMK.017/1999 dated
October 4, 1999, a public accounting firm is
an institution with a permit from the
minister of finance as a place for public
accountants to carry out their duties. A
company will look for a general accounting
firm with high credibility (quality, capability,
or power to generate confidence) high on
the financial statements in the eyes of the
users of those financial statements (Pawitri
& Yadnyana, 2015).
The fourth factor that affects auditor
switching is the change of management.
132 | The Effect of Institutional Ownership, Audit Opinion, KAP Reputation, Management
Changes and Audit Delay on Auditor Switching
Change of management is the change of
the board of directors or Chief Executive
Officer (CEO) caused by the General
Meeting of Shareholders’ (GMS) decision or
the management quit of their own accord.
When there is a change of management in
a company, it can be followed by changes
in accounting, finance, and the selection of
KAP. The administration will look for a
public accounting firm in line with its
accounting policies and reporting
(Computri & Sugiyanto, 2018).
The fifth factor that affects auditor
Switching is an audit delay. Audit delay is
the delay in audit completion time
calculated from the closing date of the
financial year until the auditor signs the
audit report. The length of audit delay
causes delays in the publication of audited
financial statements that affect investor
responses that the company is in
unfavorable condition (Widajantie & Dewi,
2020).
The difference between this study and
previous research lies in the population and
its independent variables. Based on the
background described above, the authors
are interested in researching these
problems with the research title "The
influence of institutional ownership, audit
opinion, hood reputation, management
turnover and audit delay on auditor
switching based on Empirical study on
manufacturing companies listed on the
Indonesia Stock Exchange (IDX) in 2017-
2020.
The reason the author chose the title of
this research is that he wants to know, test,
and learn whether institutional ownership,
audit opinion, the reputation of the hood,
management turnover, and audit delay can
affect or not affect auditor switching in
manufacturing companies with mandatory
auditor rotation conditions, namely the
existence of the Minister of Finance
Regulation. No.17/PMK.01/2008.
METHOD
This study uses a quantitative
approach, namely an analytical research
approach that focuses more on numerical
data processed by a statistical system in an
associative form with a research design that
examines how the influence of institutional
ownership, audit opinion, reputation,
management turnover, and audit delay on
auditor switching in manufacturing
companies listed on the Indonesia Stock
Exchange (IDX) 2017-2020.
A. Data Sources
This study uses secondary data from
the annual financial statements and
manufacturing company in 2017 - 2020
are available on the official website of
Indonesia Stock Exchange is
www.IDX.co.id.
B. Population & Sample
The population in this study are
manufacturing companies listed on the
Indonesia Stock Exchange in 2017-2020.
The sample used in this study is a
manufacturing company listed on the
Indonesia Stock Exchange in 2017-2020,
which was taken using a purposive
sampling method. The sampling process
based on predetermined criteria is as
follows:
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Table 1. Sampling
No
CriteriaCriteria
Number
1
The
manufacturing
company listed
on the
Indonesia Stock
Exchange in the
2017-2020
period.
180
2
Manufacturing
companies that
do not publish
annual reports
complete in the
2017-2020
period.
(42)
3
Manufacturing
companies that
were delisted
from the IDX
during the
2017-2020
period.
(15)
Number of Observations
studied
123
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Changes and Audit Delay on Auditor Switching
DOI : 10.36418/jrssem.v1i2.14 https://jrssem.publikasiindonesia.id/index.php/jrssem/index
Definitions of Operational and Measurement of Variables
Table 2. Operational Definitions and Measurement of Variables
Types of
Variables
Definition of
Indicator
Scale
Auditor
Switching
(Y)
Auditor switching is a change of
auditor or public accounting
firm (KAP) carried out by a
client company (Udayani &
Badera, 2017).
A dummy variable measures
auditor was switching in this
study. If the company
performs auditor switching,
it is given a value of 1
Meanwhile, if the company
does not perform auditor
switching, it is given a value
of 0 (Sari et al., 2018)
Nominal
Institutional
Ownership
(X1)
Institutional Ownership is
ownership of company shares
owned by institutional
investors. Institutional
investors include banks,
insurance companies, pension
funds, investment companies,
and other institutional
ownership (Putri & Putra,
2017).
KI =
!"
!#
X 100 %
Information :
KI: Institutional Ownership
SI: Number of shares owned
by institutional
SB: Total share capital of the
company outstanding
Nominal
Open Audit
(X2)
The audit opinion is a
statement of opinion the
auditor gives in assessing the
fairness of the company's
financial statements audited
(Anisma et al., 2014).
The measurement of this
audit opinion variable uses a
dummy variable. If the
company receives an
unqualified opinion, it is
given a value of 1, while if
the company gets anything
other than an unqualified
opinion, it is given a value of
0 (Putra & Suryanawa, 2016).
Nominal
Reputation of
KAPs
(X3) The
reputations of KAPs affiliated
with the Big Four are
considered better than those
not affiliated with the Big Four
(Wahono & Setyadi, 2014).
This variable is a dummy
variable. If the company is
affiliated with KAP Big 4, it is
given a value of 1, while if
the company is not affiliated
with KAP Big 4, it is given a
Nominal
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value of 0 (Susanto, 2015).
Change of
Management
(X4)
Change of management is a
change made by the
company's directors due to the
general meeting of
shareholders (GMS), or the
directors quit of their own
accord (Computri & Sugiyanto,
2018).
This variable is a dummy
variable. If the company
changes the directors or
CEO, then it is given a value
of 1
while if the company does
not alter the directors or
CEO, it is given a value of 0
(Sofiana et al., 2018).
Nominal
Audit Delay
(X5)
Audit Delay is the length of
time to complete the audit
measured using an interval
scale (Widajantie & Dewi,
2020).
Audit Delay = Audit Report
Date - Financial Year Close
Date.
Nominal
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Changes and Audit Delay on Auditor Switching
DOI : 10.36418/jrssem.v1i2.14 https://jrssem.publikasiindonesia.id/index.php/jrssem/index
Research Model
Model Logistic Regression
This study uses a logistic regression
analysis model (logistic regression) to
analyze the effect of the independent
variable on the dependent variable. Logistic
regression in this study is suitable for use
on categorical (nominal or numerical)
dependent variables with the regression
equation model to be tested as follows:
Ln SWITCH/(1-SWITCH) = + 1KI + 2OPINI
+ 3REP KAP + 4CEO + β5AUDLY+ ɛ
Description:
SWITCH Ln / (1-SWITCH): Probability
perform switching Auditor
α: Constants
β1- β5:The regression
coefficienteach
Of independent variable
KI: Institutional Ownership
OPINION: Opinion Audit
Firm REP: Reputation KAP
CEO: SubstitutionManagement:
AUD Audit Delay
ɛ :Error
The Multicollinearity Test
The multicollinearity test aims to test
whether there is a correlation between the
independent variables in the regression
model. A good regression model should
not correlate with independent variables.
The existence of multicollinearity can be
seen from the tolerance or variance
inflation factor (VIF) value. If the tolerance
value is more than 10% or VIF is less than
10%, it is said that there is no
multicollinearity.
Simultaneous Hypothesis Testing (F
Test)
Simultaneous test or F test is used to
determine whether there is a joint influence
between the independent variable (X) on
the dependent variable (Y). The F test can
be done by comparing f arithmetic with f
table with the following criteria:
H0 is accepted if Fcount < F table and
significant > 0.05
H1 is accepted if Fcount > Ftable and
significant < 0.05
Partial Hypothesis Testing (T-test)
A Partial test or t-test is used to show
how far the influence of one independent
variable is individually in explaining the
dependent variable. The criteria as
guidelines for the T-test are as follows:
H0 is accepted if Tcount < T table and
significant >
H1 is accepted if Tcount > T table and
significant < 0.05
RESULTS AND DISCUSSION
Research Results
Descriptive Statistics
Descriptive Statistics are used to
provide an overview or description of the
data seen from the average, standard
deviation (standard deviation), and
maximum-minimum in the study. The
number of independent and dependent
variables is 492 data. The results of the
descriptive statistics of this study can be
seen in the following table:
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Table 3. Descriptive Statistics Descriptive
Statistics
N
Mini
mum
Maxi
mum
Mean
Std.De
viatio
n
377.
54
71.6
773
33.5
48
2.13
492
93
492,
00
1.00,
9898,1
0040
492,0
0,
1.00
3577,4
7 982
492,
00
1,00,
3191,4
6 660
492
27.00
182.00
86.424
8
24.3612
6
492,
00
1.00,
1138,3
1792
492
Source: SPSS output version 28
1) Switching Auditors the dependent
variable, and the amount of data 492 has
a minimum number of 0 and a maximum
of 1. The mean value is 0.1138, and the
standard deviation is 0.31792.
2) The institutional ownership variable with
492 data has a minimum number of 2.13
and a maximum of 377.54. The mean
value is 71.6772, and the standard
deviation is 33.54893.
3) The audit opinion variable with 492 data
has a minimum of 0 and a maximum of
1. The mean value is 0.9898, and the
standard deviation is 0.10040.
4) The hood reputation variable with 492
data has a minimum number of 0 and a
maximum of 1. The mean value is
0.3577, and the standard deviation is
0.47892.
5) The management turnover variable with
492 data has a minimum of 0 and a
maximum of 1. The mean value is
0.3191, and the standard deviation is
0.46660.
6) The audit delay variable with a minimum
of 27 and a maximum of 182. The mean
value is 86.4248, and the standard
deviation is 24.36126.
Multicollinearity Test
Table 4. Multicollinearity Test
Coefficients
Model
Collinearity Statistics
Tolerance
VIF
Institutional
Ownership
,958
1,044
Audit
opinion
,982
1,018 Cap
reputation
,940
1,063
Manageme
nt change
,942
1,062
Audit delay
,974
1,026
Source: SPSS output results Version 28
Dependent switching
From the results of the data in the
table, it can be concluded that there are no
symptoms of multicollinearity between
each independent variable (Institutional
Ownership, Audit Opinion, KAP Reputation,
Management Change, and Audit Delay). as
seen from the Tolerance value greater than
10% and the VIF value less than 10 %.
Assessing Model Fit (Overall Model Fit)
The statistics used to assess model fit
138 | The Effect of Institutional Ownership, Audit Opinion, KAP Reputation, Management
Changes and Audit Delay on Auditor Switching
are based on the -2 log-likelihood function.
The likelihood of this model is the
probability that the hypothesized model
describes the input model. The statistical
model of -2LogL can be explained through
the following steps:
Table 5. -2Log Likelihood Initial Block 0: Beginning Block
Iteration History
a,b,c
Iteration
-2 Log
likelihoo
d
Coefficients
Constant
Step 0
1
363,317
-1,545
2
349,080
-1,973
3
348,760
- 2,050
4
348,760
-2,052
5
348,760
-2,052
a. Constant is included in the model.
b. Initial -2 Log-Likelihood: 348,760
c. Estimation terminated at iteration
number 5 because parameter estimates
changed by less than 001.
Source: SPSS Version 28 output results
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Table 6. -2Log Likelihood End
Block 1: Method = Enter
Iteration History
a,b,c,d
Iteration
-2 Log
likelihoo
d
Coefficients
Constant
KI
audit
opinion
hood
reputati
on
management
turnover
audit
delay
Step
1
1
350.876
-1.868,
004
-, 378
-,
332,183,
005
2
330.353
-2.482,
007
-, 628
-,
688,344,
008
3
329.092
-2.645,
008
-, 694
-,
902,413,
009
4
329.078
-2.661,
008
-, 697
-,
935,420,
009
5
329.078
-2.661,
008
-, 697
-,
936,420,
009
a. Method: Enter
b. Constant is included in the model.
c. Initial -2 Log-Likelihood: 348,760
d. Estimation terminated at iteration number 5 because parameter estimates changed by
less than .001.
Source: SPSS Version 28 Output Results
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and Audit Delay on Auditor Switching
Based on the SPSS output results in the
table above, the -2LogL value for block
number 0 is 348,760entering the, and after
five independent variables, the -2LogL
value for block number 1 is 329.078. This -
2LogL decrease can be interpreted as the
addition of an independent variable which
shows that it can improve model fit and a
better regression model.
Testing the Feasibility of the Data Model
Table 7. Results of the Hosmer and
Lemeshow Test
Hosmer and Lemeshow Test
Step
Chi-square
df
Sig.
1
4.569
8
803
Source: SPSS output Version 28
From the above results, the SPSS
output has a Chi-square calculate with the
worth of 4.569, degree of freedom = 8, and
sig. 0.803. The result of Chi-square X
2
count
is 4,569, then Chi-square X
2
tables that are
obtained are worth 9,487 ( X
2
count <
X
2
table), sig. of 0.803, which is greater than
0.005. It can conclude that this logistic
regression model is acceptable.
Research Data Analysis Model
1. Logistic Regression Analysis Logistic
regression analysis is used to
determine whether there is an influence
between the independent variables on
the dependent variable. The results of
this test can be seen in the following:
Table 8. Results of the Logistics
Regression Analysis of
B
SE
Wald
df
Sig.
Exp
(B)
Institutional
Ownership
,008
,003
4,940
1
,026
1,008
Audit opinion
-,697
1,145
,370
1
,543
,498
reputation
-
,936
,360
Cap6,
752
1
,009
,392
Change of
management
,420
,310
1,832
1
,176
1,522
Audit delay
,009
,005
4,162
1
,041
1,009
Constant
-2,661
1,217
4,781
1
,029
,070
Source: SPSS output results Version 28
From the table above, the logistic
regression equation can be formed as
follows:
Ln
!$"%&'
()*!$"%&'
= -2.661 +0,008KI -
0.697OPINION - 0.936 REP
KAP +0,420CEO +
0,009AUDLY + e
Interpretation of the regression
equation above is as follows:
a) Constants
Constants of -2.661, which means if
there is no institutional ownership, audit
opinion, hood reputation, management
change, and audit delay, there will be no
auditor change in manufacturing
companies on the IDX. Then the
probability is considered 0.
b) Institutional Ownership =0,008
The regression coefficient of the
Institutional Ownership variable is 0.008
(positive value) that every time there is
an increase in institutional ownership, it
will allow a change of auditors in
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manufacturing companies on the IDX.
The probability is 0.008.
c) Audit Opinion = - 0.697
The regression coefficient of the audit
opinion variable is - 0.697 (negative
value), which means that for every
increase in the audit opinion variable by
1 unit, there will be a decrease in auditor
turnover in manufacturing companies
on the IDX by 0.697 units. Then the
Probability is considered 0.
d) Reputation of Kap = - 0,936
The regression coefficient of the hood
reputation variable is - 0,936 (negative
value), which means that for every
increase in the hood reputation variable
by 1 unit, there will be a decrease in
auditor turnover in manufacturing
companies on the IDX 0,936 units. So the
probability is considered 0.
e) Substitution Management =0,420
The regression coefficient of the
management turnover variable is 0,420
(positive value), which means that every
case of replacement of management will
allow the change of auditor in
manufacturing companies in BEI. Then
the probability is 0.420.
f) Audit Delay =0.009
The regression coefficient of the audit
delay variable is0.009 (positive value),
which means that every time there is an
audit delay, it will allow a change of
auditors in manufacturing companies on
the IDX. Then the probability is 0.009.
2. Coefficient of Determination
Testing the coefficient of
determination can be seen from the
value of Nagelkerke R Square. Testing
the coefficient of determination
determines how much the independent
variable can influence the dependent
variable. Results of output Nagelkerke R
Square can be seen in the following
table:
Table 9. Coefficient of Determination
Model Summary
St
e
p
1
-2 Log
likelihood
Cox & Snell
R Square
Nagelkerk
e R
Square
329.078
A,
039,077
Estimation terminated at iteration
number 5 Because the parameter
estimates changed by less than 001.
Source: SPSS Version 28 Output Results
From the SPSS output results above, it
can see that the Cox & Snell R Square value
is 0.039 and Nagelkerke R Square is 0.077,
which indicates that the ability of the
independent variable (auditor switching) in
explaining the dependent variable
(institutional ownership), audit opinion,
hood reputation, management change,
and audit delay) in this study amounted to
0.077 or 7.7%, and there were 92.3% which
explained other dependent variables
outside this research model.
3. Simultaneous Hypothesis Testing (F
Test)
Simultaneous hypothesis-testing
can be seen in the Omnibus Of Test
Model Coefficient. The basis for the
decision is if the probability value (sig.)
> 0.05, then H0 is accepted, and if the
probability value (sig.) < 0.05, then H1 is
accepted. The results of the
142 | The Effect of Institutional Ownership, Audit Opinion, KAP Reputation, Management
Changes and Audit Delay on Auditor Switching
simultaneous test output can be seen in
the following table:
Table 10. Simultaneous Test Results (F
Test)
Omnibus Tests of Model Coefficients
Chi-square
df
Sig.
Step 1
Step
19,682
5
,001
Block
19,682
5
,001
Model
19,682
5
,001
Source: SPSS Version 28 Output Results
Based on the SPSS output results
above, the calculated Chi-square value is
19.682, and the significant weight is 0.001.
The development of the Chi-square X
2
count is 19,682. The chi-square X2 table
obtained is 11,070 (X2count > X2table), the
value of sig. of 0.001 is smaller than 0.005.
It can conclude that institutional ownership,
audit opinion, hood reputation,
management turnover, and audit delay
simultaneously significantly affect auditor
switching in manufacturing companies on
the 2017-2020 BEI.
4. Partial Hypothesis Testing (T-Test)
Partial hypothesis testing can be seen
in Variables in the Equation. The basis for
the decision is if the p-value > 0.05, then
H1 is rejected, and if the p-value <0.05,
then H1 is accepted. The results of the
partial test output can be seen in the
following table:
Table 11. Partial Test Results (T-test)
B
SE
Wald
df
Sig.
Exp
(B)
Institutional
Ownership
,008
,003
4,940
1
,026
1,008
Audit opinion
-,697
1,145
,370
1
,543
,498
reputation
-,936
,360
Cap6,
752
1
,009
,392
Change of
management
,420
,310
1,832
1
,176
1,522
Audit delay
,009
,005
4,162
1
,041
1,009
Constant
-2,661
1,217
4,781
1
,029
,070
Source: SPSS output results Version 28
The t-test results show that
Institutional Ownership as the first variable
(X1) with significant results or p-value 0.026
is smaller than 0.05, then H0 is rejected, and
H1 is accepted, so that partially institutional
ownership has a significant effect on
Auditor Switching in manufacturing
companies on the Indonesia Stock
Exchange 2017-2020.
Audit opinion as to the second variable
(X2) with significant results or p-value 0.543
greater than 0.05 then H0 is accepted, and
H1 is rejected so that partially audit opinion
has no significant effect on Auditor
Switching in manufacturing companies on
the Indonesia Stock Exchange 2017-2020.
The reputation of the hood as the third
variable (X3) with significant results or p-
value of 0.009 less than 0.05, then H0 is
rejected and H1 is accepted so that partially
the reputation of the hood has a significant
effect on Auditor Switching in
manufacturing companies on the Indonesia
Stock Exchange 2017-2020.
Change of management as the fourth
variable (X4) with significant results or p-
value 0.176 greater than 0.05 then H0 is
accepted and H1 is rejected so that partially
the change in management has no
significant effect on Auditor Switching in
manufacturing companies on the Indonesia
Stock Exchange 2017-2020.
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DOI : 10.36418/jrssem.v1i2.14 https://jrssem.publikasiindonesia.id/index.php/jrssem/index
Audit delay as the fifth variable (X5)
with significant results or p-value 0.041 less
than 0.05 then H0 is rejected and H1 is
accepted so that partially audit delay has a
significant effect on Auditor Switching in
manufacturing companies on the Indonesia
Stock Exchange 2017-2020.
Discussion of Research Results
1. The Effect of Institutional Ownership
on Auditor Switching
The first hypothesis in this study
showed significant results or p-value
0.026 smaller than 0.05. So this
hypothesis states that institutional
ownership partially affects auditor
switching in manufacturing companies.
This happens because a company with
concentrated institutional ownership
will protect its ownership rights, so it has
the power to determine company
policies, one of which is whether or not
it is necessary to conduct auditor
switching. As the number of majority
shareholders, institutional ownership
tends to use their power for personal or
group interests. If these shareholders
have conflicts/problems with auditors or
Public Accounting Firms (KAP)
conducting company audits, they will do
auditor switching.
This result is supported by previous
studies by (Sari et al., 2018) and (Dejan
& Nurbaiti, 2020), which state that
institutional ownership partially affects
auditor switching.
2. The Effect of Audit Opinion on
Auditor Switching
The second hypothesis in this study
showed significant results or a p-value
of 0.543 greater than 0.05. So this
hypothesis states that the audit opinion
partially does not affect auditor
switching in manufacturing companies.
This research shows that the 492 sample
companies studied obtained an
unqualified opinion, so the company
was satisfied with the statement
obtained, which made the company not
change auditors. When a company
receives an idea other than complete,
the company will not necessarily change
the auditor because if the company
changes the auditor, it will not
necessarily provide an opinion following
the wishes of the management.
This result is supported by previous
studies conducted by (Rahmi et al.,
2019) and (Widajantie & Dewi, 2020),
which state that audit opinion partially
does not affect auditor switching.
3. The Effect of KAP'S Reputation on
Auditor Switching
The third hypothesis in this study
shows significant results or a p-value of
0.009 smaller than 0.05. So this
hypothesis states that the hood's
reputation partially has a substantial
effect on Auditor Switching in
manufacturing companies on the
Indonesia Stock Exchange 2017-2020.
reputation partially shows that the
company will choose a KAP with better
quality to improve the quality of
financial reports and the company's
reputation for users of financial
statements. The company will select a
KAP affiliated with the Big 4 because it is
considered to have a better reputation
144 | The Effect of Institutional Ownership, Audit Opinion, KAP Reputation, Management
Changes and Audit Delay on Auditor Switching
and expertise. It is expected to create
interest for parties who want to invest.
Thus, companies that use non-Big 4
KAPs tend to replace their KAPs with Big
4 affiliated KAPs.
This result is supported by previous
research conducted by (Pawitri &
Yadnyana, 2015), which states that
auditor reputation partially affects
auditor switching.
4. The Effect of Management Changes
on Auditor Switching
The fourth hypothesis in this study
shows significant results or a p-value of
0.176 greater than 0.05. So this
hypothesis states that partial
management changes have no
significant effect on Auditor Switching in
manufacturing companies on the
Indonesia Stock Exchange 2017-2020.
This happens because management
changes are not always followed by
changes in company policies, especially
in KAP selection. This is because the new
management feels that the previous
management policy regarding KAP is
good enough for the company. If the
new administration wants to change the
auditor, it is necessary to obtain
approval at the General Meeting of
Shareholders.
This result is supported by a
previous study (Astrini & Muid, 2013)
which stated that partial management
Changes did not affect auditor
switching.
5. Effect of Audit Delay on Auditor
Switching
The fifth hypothesis in this study
shows significant results, or a p-value of
0.041 is smaller than 0.05. So this
hypothesis states that audit delay
partially has a substantial effect on
auditor switching in manufacturing
companies on the Indonesia Stock
Exchange 2017-2020. Audit delay is the
time required by the auditor to audit the
financial statements since the closing
date of the company's books. The length
of audit delay causes delays in the
publication of the company's financial
statements, which affect investor
responses that the company's condition
is not in good condition. This condition
can cause the company to be late in
obtaining additional funds to finance
the company's operational activities,
which causes the company to change
auditors (Hestyaningsih et al., 2020).
This result is supported by previous
research conducted by (Arisudhana,
2017), which states that audit delay
partially affects auditor switching.
6. The Effect of Institutional Ownership,
Audit Opinion, KAP Reputation,
Management Change, Audit Delay on
Auditor Switching
The sixth hypothesis in this study
shows the results of sig. of 0.001, and
this is smaller than 0.005. So this
hypothesis states that institutional
ownership, audit opinion, hood
reputation, management turnover, and
audit delay simultaneously have a
significant effect on auditor switching in
manufacturing companies on the 2017-
2020 BEI. The audit delay simultaneously
shows that the occurrence of auditor
changing in a company due to a large
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amount of institutional ownership can
affect the request for an audit opinion,
the greater the number of institutional
ownership, the greater the demand for
receiving an unqualified opinion
because the statement describes the
state of the company in good condition.
To get an idea that convinces
shareholders, it is necessary to have a
KAP with a good reputation and quality
to give more trust to interested parties.
The management is very concerned
about the company’s quality in choosing
a KAP with a better reputation and
expertise, which is later expected to
create interest for investors. The
investors will know the condition of the
company is in a dire situation if the
company is late in publishing financial
statements to the capital market due to
the audit delay carried out by the KAP so
that the company will be late in
obtaining additional funds to finance
the company's operational activities. So
that institutional ownership, audit
opinion, KAP reputation, management
change, and audit delay can
simultaneously affect auditor switching.
CONCLUSIONS
Based on the above discussion results,
it can conclude that partially institutional
ownership, hood reputation, and audit
delay have a significant effect on auditor
switching. Meanwhile, the audit opinion
and management change partly have no
considerable impact on auditor switching.
However, simultaneously
institutional ownership, audit opinion,
hood reputation, management turnover,
and audit delay substantially affect auditor
switching. The magnitude of the coefficient
of determination is 0.077, which indicates
that 7.7% of auditor switching can only be
explained by institutional ownership, audit
Opinion, hood reputation, management,
and audit turnover. In comparison, the
remaining 92.3% explains other dependent
variables outside this research model.
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DOI : 10.36418/jrssem.v1i2.14 https://jrssem.publikasiindonesia.id/index.php/jrssem/index
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