Analysis Of Debt Default Effects, Audit Quality, Audit Opinion And Company Growth On Receiving A Going Concern Audit Opinion In Manufacturing Companies Listed On The Indonesia Stock Exchange

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Analysis of Debt Default Effects, Audit Quality, Audit Opinion, and Company Growth on Receiving a Going Concern Audit Opinion in Manufacturing Companies Listed on the Indonesia Stock Exchange

Introduction

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a significant number of manufacturing companies listed on it. The Going Concern audit opinion is a crucial aspect of financial reporting, as it provides an indication to investors and other stakeholders regarding a company's ability to continue its operations in a reasonable period of time. However, the factors that influence the Going Concern audit opinion are not yet fully understood. This study aims to explore the effect of several factors such as Debt Default, Audit Quality, Audit Opinion, and Company Growth on Receiving a Going Concern Audit Opinion in manufacturing companies listed on the Indonesia Stock Exchange.

Methodology

This study used secondary data taken from financial statements published online through the official website of the Indonesia Stock Exchange, namely www.idx.co.id. The sample used in this study included manufacturing companies listed on the Indonesia Stock Exchange during the 2014-2016 period. The sampling method used was purposive sampling, and the results were obtained 143 observations from 27 companies. Hypothesis testing in this study was carried out by logistical regression method.

Results

The results of the analysis show that the default debt variable does not have a significant effect on the Going Concern audit opinion. Likewise, audit quality also does not show a significant effect. Meanwhile, audit opinion is proven to have a significant positive influence on the Going Concern audit opinion. On the other hand, company growth also does not show a significant effect on the Going Concern audit opinion.

Discussion

In the context of manufacturing companies listed on the Indonesia Stock Exchange, the Going Concern audit opinion is very important to assess the company's survival. This opinion gives an indication to investors and other stakeholders regarding the company's ability to continue its operations in a reasonable period of time. The powerlessness to fulfill debt obligations, known as Debt Default, apparently does not affect the opinion of going concern. This may indicate that companies that experience default still have sufficient mechanisms to carry out debt restructuring or get support from shareholders.

Likewise, audit quality, although essential in maintaining the integrity of financial statements, is not directly reflected in the opinion of going concern. Interestingly, the results showed that the previous audit opinion had a significant influence on the Going Concern audit opinion. This indicates that the auditor plays an important role in giving signals to stakeholders regarding the company's financial situation. Therefore, auditors who provide more positive opinions may cover some of the weaknesses in the financial statements.

Company growth that does not affect the Going Concern audit opinion can be interpreted that growth does not always guarantee the company's financial health. Some companies may show good growth in terms of sales but still experience liquidity or debt problems, which in turn can affect the auditor's opinion.

Conclusion

The results of this study show the need for further research by adding other variables related to the Going Concern audit opinion. In addition, increasing the number of samples can provide a more comprehensive picture of the relationship between the variables studied. This will enrich the study of the importance of audit opinion in determining the survival of companies in dynamic markets such as the Indonesia Stock Exchange.

Recommendations

Based on the findings of this study, the following recommendations are made:

  1. Further research: The results of this study show the need for further research by adding other variables related to the Going Concern audit opinion.
  2. Increasing the number of samples: Increasing the number of samples can provide a more comprehensive picture of the relationship between the variables studied.
  3. Audit opinion: The auditor plays an important role in giving signals to stakeholders regarding the company's financial situation. Therefore, auditors who provide more positive opinions may cover some of the weaknesses in the financial statements.

Limitations

This study has several limitations, including:

  1. Sample size: The sample size used in this study was relatively small, which may limit the generalizability of the findings.
  2. Data quality: The data used in this study was secondary data, which may be subject to errors or biases.
  3. Variables: The variables used in this study were limited to Debt Default, Audit Quality, Audit Opinion, and Company Growth, which may not capture the full range of factors that influence the Going Concern audit opinion.

Future Research Directions

This study opens up opportunities for further research in the field of accounting and audits, especially in the context of companies listed in Indonesia. Some potential future research directions include:

  1. Investigating the impact of other variables: Investigating the impact of other variables, such as management quality, board composition, and corporate governance, on the Going Concern audit opinion.
  2. Examining the relationship between audit opinion and financial performance: Examining the relationship between audit opinion and financial performance, including measures such as return on equity (ROE) and return on assets (ROA).
  3. Analyzing the effect of industry and market conditions: Analyzing the effect of industry and market conditions on the Going Concern audit opinion, including factors such as industry growth rate and market volatility.

Conclusion

In conclusion, this study provides insight into the factors that influence the Going Concern audit opinion in manufacturing companies listed on the Indonesia Stock Exchange. The results show that audit opinion has a significant positive influence on the Going Concern audit opinion, while Debt Default, audit quality, and company growth do not have a significant effect. The study also highlights the need for further research by adding other variables related to the Going Concern audit opinion and increasing the number of samples.
Q&A: Analysis of Debt Default Effects, Audit Quality, Audit Opinion, and Company Growth on Receiving a Going Concern Audit Opinion in Manufacturing Companies Listed on the Indonesia Stock Exchange

Q: What is the purpose of this study?

A: The purpose of this study is to explore the effect of several factors such as Debt Default, Audit Quality, Audit Opinion, and Company Growth on Receiving a Going Concern Audit Opinion in manufacturing companies listed on the Indonesia Stock Exchange.

Q: What is the Going Concern audit opinion?

A: The Going Concern audit opinion is a crucial aspect of financial reporting, as it provides an indication to investors and other stakeholders regarding a company's ability to continue its operations in a reasonable period of time.

Q: What are the factors that influence the Going Concern audit opinion?

A: The factors that influence the Going Concern audit opinion are Debt Default, Audit Quality, Audit Opinion, and Company Growth.

Q: What is the relationship between Debt Default and the Going Concern audit opinion?

A: The results of this study show that Debt Default does not have a significant effect on the Going Concern audit opinion. This may indicate that companies that experience default still have sufficient mechanisms to carry out debt restructuring or get support from shareholders.

Q: What is the relationship between Audit Quality and the Going Concern audit opinion?

A: The results of this study show that Audit Quality does not have a significant effect on the Going Concern audit opinion. This may indicate that audit quality is not directly reflected in the opinion of going concern.

Q: What is the relationship between Audit Opinion and the Going Concern audit opinion?

A: The results of this study show that Audit Opinion has a significant positive influence on the Going Concern audit opinion. This indicates that the auditor plays an important role in giving signals to stakeholders regarding the company's financial situation.

Q: What is the relationship between Company Growth and the Going Concern audit opinion?

A: The results of this study show that Company Growth does not have a significant effect on the Going Concern audit opinion. This may indicate that growth does not always guarantee the company's financial health.

Q: What are the implications of this study?

A: The implications of this study are that auditors should pay close attention to the company's financial situation and provide a more positive opinion if the company is facing financial difficulties. Additionally, companies should focus on improving their financial health and reducing their debt obligations to avoid receiving a Going Concern audit opinion.

Q: What are the limitations of this study?

A: The limitations of this study are that the sample size was relatively small, the data was secondary, and the variables used were limited.

Q: What are the future research directions?

A: The future research directions include investigating the impact of other variables, examining the relationship between audit opinion and financial performance, and analyzing the effect of industry and market conditions on the Going Concern audit opinion.

Q: What are the recommendations of this study?

A: The recommendations of this study are that further research should be conducted to add other variables related to the Going Concern audit opinion and increase the number of samples. Additionally, auditors should pay close attention to the company's financial situation and provide a more positive opinion if the company is facing financial difficulties.