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

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Introduction

In the business world, especially for companies listed on the Indonesia Stock Exchange (BEI), the receipt of the Going Concern opinion from the auditor is one important indicator for assessing the company's financial health. This opinion reflects whether the company is able to continue to operate in the future. The Going Concern opinion is a crucial aspect of a company's financial statement, as it provides insight into the company's ability to meet its financial obligations and continue its operations. This study aims to analyze the factors that influence the reception of Going Concern opinions, which include Debt Default (Debt Payment Development), Audit Quality, and Audit Opinion itself.

Research Background

The Indonesia Stock Exchange (IDX) is the primary stock exchange in Indonesia, and it plays a crucial role in the country's financial system. The IDX has a total of 126 manufacturing companies listed on its platform, and these companies are subject to various regulations and requirements. One of the key requirements is the submission of financial statements, which are audited by independent auditors. The Going Concern opinion is a critical component of the audit report, as it provides insight into the company's ability to continue its operations.

This study took a sample of 35 manufacturing companies listed on the IDX during the period 2009 to 2012 with the purposive sampling method. The data used is taken from the financial statements published on the official website of the IDX, namely www.idx.co.id. This research is included in the causal research category, which aims to see the causal relationships between variables. The independent variables studied are Debt Default, Audit Quality, and Audit Opinion, while the dependent variable is the acceptance of going concern opinions.

Analysis Method

In this study, the authors use logistical regression analysis to evaluate the effect of the three independent variables on the dependent variable. Logistical regression analysis is a statistical method that is used to model the relationship between a binary dependent variable and one or more independent variables. This method is suitable for this study, as the dependent variable is a binary variable (acceptance or rejection of the Going Concern opinion).

The results of the analysis show that simultaneously, the three independent variables have a significant influence on the acceptance of the Going Concern opinion. However, when it was analyzed partially, it was found that Debt Default and audit quality did not have a significant influence, with a coefficient that showed negative effects on the acceptance of these opinions. Meanwhile, audit opinion has a significant influence with a positive coefficient.

Discussion

The negative influence of Debt Default and audit quality on the acceptance of Going Concern opinions may be explained by how the market views the risk and potential failure of the company. When the company experiences late payment of debt, this usually reduces auditor and investor confidence in the company's business continuity. Poor audit quality can add to the risks faced by the company, so the auditor may be hesitant to provide positive going concern opinions.

On the other hand, good audit opinion can strengthen positive perceptions about the potential for the sustainability of the company. This shows that the auditor believes in the company's ability to survive in the future, which in turn can increase investor confidence and other stakeholders.

From the results of this study, the importance of company management is seen to pay attention to debt and audit quality in order to increase the chances of getting a positive going concern opinion. Companies that are able to manage their debt well and ensure high audit quality will have a better position in the eyes of the auditor and investor.

Conclusion

In conclusion, this research provides valuable insights for companies in the manufacturing sector listed on the IDX. Factors such as Debt Default, Audit Quality, and Audit Opinion have a variety of influence on the acceptance of going concern opinions. For this reason, companies need to prioritize debt management and ensure that the quality of the audit they receive is the best to improve their future reputation and survival. Thus, companies will be better prepared to face challenges in increasingly competitive markets.

Recommendations

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

  1. Debt Management: Companies should prioritize debt management to avoid late payment of debt, which can reduce auditor and investor confidence.
  2. Audit Quality: Companies should ensure that the quality of the audit they receive is the best, as poor audit quality can add to the risks faced by the company.
  3. Audit Opinion: Companies should strive to receive a positive audit opinion, as it can strengthen positive perceptions about the potential for the sustainability of the company.

By following these recommendations, companies can improve their chances of getting a positive going concern opinion, which can increase investor confidence and other stakeholders.

Limitations of the Study

This study has several limitations, including:

  1. Sample Size: The sample size of this study is relatively small, which may limit the generalizability of the findings.
  2. Data Collection: The data used in this study is taken from the financial statements published on the official website of the IDX, which may not be comprehensive.
  3. Methodology: The logistical regression analysis used in this study may not be the most suitable method for analyzing the relationship between the independent variables and the dependent variable.

Despite these limitations, this study provides valuable insights into the factors that influence the reception of Going Concern opinions in manufacturing companies listed on the IDX.

Future Research Directions

Future research directions include:

  1. Investigating the Relationship between Debt Default and Audit Quality: This study found that Debt Default and audit quality did not have a significant influence on the acceptance of Going Concern opinions. However, further research is needed to investigate the relationship between these two variables.
  2. Examining the Impact of Going Concern Opinion on Company Performance: This study focused on the factors that influence the reception of Going Concern opinions. However, further research is needed to examine the impact of Going Concern opinion on company performance.
  3. Investigating the Effect of Going Concern Opinion on Investor Confidence: This study found that Going Concern opinion has a significant influence on investor confidence. However, further research is needed to investigate the effect of Going Concern opinion on investor confidence.

By exploring these research directions, future studies can provide more comprehensive insights into the factors that influence the reception of Going Concern opinions in manufacturing companies listed on the IDX.

Q: What is the Going Concern opinion, and why is it important?

A: The Going Concern opinion is a critical component of an audit report that reflects whether a company is able to continue its operations in the future. It is an important indicator of a company's financial health and is used by investors and other stakeholders to assess the company's ability to meet its financial obligations.

Q: What are the factors that influence the reception of Going Concern opinions?

A: This study found that Debt Default, Audit Quality, and Audit Opinion are the factors that influence the reception of Going Concern opinions. Debt Default refers to the company's ability to pay its debts on time, while Audit Quality refers to the quality of the audit performed by the auditor. Audit Opinion refers to the auditor's opinion on the company's financial statements.

Q: What is the relationship between Debt Default and the reception of Going Concern opinions?

A: This study found that Debt Default has a negative influence on the reception of Going Concern opinions. When a company experiences late payment of debt, it reduces auditor and investor confidence in the company's business continuity.

Q: What is the relationship between Audit Quality and the reception of Going Concern opinions?

A: This study found that Audit Quality has a negative influence on the reception of Going Concern opinions. Poor audit quality can add to the risks faced by the company, so the auditor may be hesitant to provide positive going concern opinions.

Q: What is the relationship between Audit Opinion and the reception of Going Concern opinions?

A: This study found that Audit Opinion has a positive influence on the reception of Going Concern opinions. A good audit opinion can strengthen positive perceptions about the potential for the sustainability of the company.

Q: What are the implications of this study for companies listed on the Indonesia Stock Exchange?

A: This study provides valuable insights for companies listed on the IDX. Companies need to prioritize debt management and ensure that the quality of the audit they receive is the best to improve their future reputation and survival.

Q: What are the limitations of this study?

A: This study has several limitations, including a relatively small sample size, data collection limitations, and the use of logistical regression analysis.

Q: What are the future research directions based on this study?

A: Future research directions include investigating the relationship between Debt Default and Audit Quality, examining the impact of Going Concern Opinion on company performance, and investigating the effect of Going Concern Opinion on investor confidence.

Q: What are the recommendations for companies based on this study?

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

  1. Debt Management: Companies should prioritize debt management to avoid late payment of debt, which can reduce auditor and investor confidence.
  2. Audit Quality: Companies should ensure that the quality of the audit they receive is the best, as poor audit quality can add to the risks faced by the company.
  3. Audit Opinion: Companies should strive to receive a positive audit opinion, as it can strengthen positive perceptions about the potential for the sustainability of the company.

By following these recommendations, companies can improve their chances of getting a positive going concern opinion, which can increase investor confidence and other stakeholders.