Eka Wina Septiana Vita 1, Kartika Hendra Titisari 2, Anita Wijayanti 3

Transcription

1 Th 2 nd Intrnational Confrnc on Tchnology, Education, and Social Scinc 2018 (Th 2 nd ICTESS 2018) Th Effct of Audit Quality Attributs on th Cost of Equity Capital (Empirical Study on Manufacturing Companis Listd In Indonsia Stock Exchang Yar ) Eka Wina Sptiana Vita 1, Kartika Hndra Titisari 2, Anita Wijayanti 1,2, Accounting Dpartmnt Faculty Of Economics, Univrsitas Islam Batik Surakarta Jl. KH. Agus Salim No 10, Sondakan, Lawyan, Surakarta Indonsia ka.wina2@gmail.com Abstract: This rsarch aims to xamin and analyz th ffct of audit quality attributs on th cost of quity capital. Th audit quality attributs is masur by th siz of th public accounting firm, th industry spcialty auditor and audit tnur. Manwhil, th cost of quity capital is masur by using th PE Ratio. Th population in this study is all manufacturing companis listd on Indonsia Stock Exchang on Sampling tchniqu using purposiv sampling mthod obtaind by sampls 27 companis during th yar obsrvation. Th rsult showd that th variabl siz of th public accounting firm and th industry spcialization of th auditor ngativly affct th cost of quity capital. Manwhil, audit tnur dos not affct th cost of quity capital. Basd on th dtrmination cofficint tst (R 2 ) obtaind th cofficint of dtrmination with adjustd R 2 of 0,527. Ths rsult show that 52,7% of variabls cost of quity capital can b xplaind by th siz of th public accounting firm, th industry spcialization of auditors and audit tnur. Whil, th rst of 47, % is xplaind by othr factors outsid th modl in this rsarch. Kywords: [audit quality attributs ; cost of quity capital] 1. INTRODUCTION Th sparation of ownrship and control of th company causd th asymmtry of information btwn company managrs and invstors (Hajiha & Sobhani, 2012). Currntly, th transparncy and th quality of financial information is th basis of conomic dcision-making of invstors, crditors, and othr usrs. Auditing rducs th information asymmtry that xists btwn managrs and stakholdrs of th company by allowing outsid partis to vrify th validity of th financial statmnts (Hajiha & Sobhani, 2012). According (Khurana & Raman, 2004) Audit is a rquirmnt for usrs of financial statmnts. Th rol of th monitoring of audits dsignd to improv information about th company. This will rduc th asymmtry of information btwn th company and invstors. Th gratr th risk of information ncountrd by invstors, th gratr th valu th quality of audits. Audit information rducs th risk facd by invstors bcaus it allows thm to vrify th validity of th financial statmnts. Any warranty on th quality audit will lowr th cost of quity capital. Spcialization industry Auditors as diffrntial, this stratgy givs Auditors a comptitiv advantag. Thus, th spcification of th industry was abl to giv a bttr auditor quality. An auditor indpndnc will b lost if thr is a vry clos rlationship btwn th Auditors with clints bcaus it will influnc th opinions and attituds of th auditors thmslvs. An auditor indpndnc will b lost if thr is a vry clos rlationship btwn th Auditors with clints 56

2 bcaus it will influnc th opinions and attituds of th auditors thmslvs. On of th most influntial is auditing a long tnur. Auditing a long tnur would giv ris to a sns of motional kinship btwn th public accounting or with th clint as a rsult, th quality of th audit work th auditor comptnc and will dcras. Th cost of quity capital is th rturn xpctd by invstors as thy invstd mony in th company. In othr words, th cost of capital arnd from trad btwn risk and rturn. This is an important fact that must considrd by th managr that th risk information is rportd to affct th rat of rturn invstors. Th risk of information dpnding on th lvl of classifid information and th accuracy of th information rportd. (Hajiha & Sobhani, 2012) statd that rsarch conductd (Khurana & Raman, 2004), Hop t al (2008), Ahmd t al (2008), Stok t al (2009) provid vidnc of a dirct rlationship btwn th diffrnt dimnsions of quality audits ar rlatd positivly with a cost of quity capital. According to (Jnsn & Mckling, 1976) in (Stiawan & Daljono, 2014) Agncy thory is th rlationship that occurs in a contract btwn a party with othr partis. In th contract, thr ar two partis namly th ownr (th principal) and an agnt is giv a party authorizd by th ownr to tak a dcision in accordanc with th intrsts of th principal. Agncy thory assums that all individuals Act in thir own intrsts. Sharholdrs acting as principals assumd ar intrstd only in th financial rsult incrasd or thir invstmnt in th company. Whil th agnts assumd to rciv gratification in th form of financial compnsation and th trms that accompany such a rlationship. (DAnglo, 1981) indicatd that big Auditors tn to dlivr high-quality audit srvics on crtain clints rathr than small Auditors bcaus of dpndnc in conomic mattrs th auditor on th clint can b ignord for Auditors and Auditors hav grat largr losss (losss will los its rputation) in cas of failur of th audit, th Auditors compard to small. Balsam and Krishnan (200) in (Dsiliani & Miranto, 2015) says that th auditor spcialists tnd to invst mor in th rcruitmnt and training of staff, information tchnology and audit tchnology mor sophisticatd than th non-auditors spcialist. Industrial spcialist Auditors also tnd to hav an incntiv to kp thir rputation and avoid damag to rputation. This shows that th spcialist auditor industry providing quality highr than th audit th auditor of non-spcialist. As a rsult, thy tnd to b not in th intrvntion by rprsntativs of managmnt. Aftr svral yars of auditor audit srvics to clints that will gnrat a clos sns of family thn can impact th dclin in th quality of financial rporting. Audit th audit rsultd in th tnur of high quality, so that should rduc th risk of information and produc a cost of quity capital is lowr. This rsarch aims to (1) prov that rlationship btwn th siz of public accountant firm against th cost of quity capital. (2) Prov that thr is a rlationship btwn audit industry spcialitis against th cost of quity capital. () Prov that thr is rlationship audit tnur against th cost of quity capital. 57

3 2. THEORITICAL FRAMEWORK Th thoritical framwork of this rsarch is illustratd as follows: Public accounting firm siz (X 1 ) Audit spcialty industris (X 2 ) Audit tnur (X ) H1 H2 H Figur 1. Thoritical Framwork. RESEARCH METHODS Rsarch mthod using th mthod of contnt analysis, data typ usd is th quantitativ data. Th sourc data usd ar scondary data. Th data collction mthod usd is th documntation. Data analysis tchniqu usd was multipl linir rgrssion analysis. Th population in this study was all company listd on Indonsia stock xchang yar by using th purposd sampling. Data Analysis Tchniqu Cost of quity capital Data analysis tchniqus usd in this rsarch ar as follows: a. Dscriptiv statistics on do to gt an ovrviw of th variabls within a rsarch b. A classic Assumption Tst 1) Tst of Normality was don to know that normally distributd data to rgrssion 2) Autocorrlation tst was conduct to find out th rsidual in a singl obsrvation. ) Multicollinarity tst aims to find out thr or whthr th sam rlationship btwn fr variabls usd. 4) Th htroskdasticity tst aims to analyz, th occurrnc of inqualitis btwn th rsidual. c. Multipl linar rgrssion analysis is th tchniqu through a cofficint paramtr to know th magnitud of th influnc of variabls is indpndnt of th dpndnt variabl. Th rgrssion modl in this rsarch: Y = α + β1x1 + β2x2 + βx + Information: Y : Th cost of quity capital X1 : Siz of public accounting firm X2 : Auditor Industry Spcialitis X : Audit Tnur α : constant β1 - β : Rgrssion cofficint : rror d. Th F-tst is don to s th impact of influnc btwn indpndnt variabls to dpndnt variabls simultanously. T-tst was conduct to know th influnc of partially dpndnt variabl against th indpndnt variabl. f. Dtrmination of cofficint of tst don to masur th proportion of th variation in th fr variabls in xplains zro rgrssion. 4. RESEARCH RESULT Rsult of Data Collction Th objct of this rsarch is a company listd on Indonsia Stock Exchang in This rsarch using mthod of purposiv sampling so at 27 companis was outstanding rsarch into th sampl. Th cost of quity capital masurd with PE Ratio. 58

4 PE Ratio = Pric Pr Shars Earning Pr Shars Figur 2. PE Ratio Classical Assumption Tst Rsult Th Dscriptiv Statistics Analysis Th rsult of th analysis of dscriptiv th public accounting firm siz, Audit spcialty industris, Audit tnur and th cost of quity capital is srving th following: Tabl 1 Summary Of Dscriptiv Statistic N Min Max Man Std Dv UKAP ,7 0,48 21 SPES ,44 0, Tnur ,6 0, BME 27-85,7 1 9, 0,62 7 Sourc of Data Procssd , Th avrag siz of a public accountant at th manufacturing companis listd on th Indonsia stock xchang (IDX) in of 0.7 standard dviation of to or gratr than th avrag valu, thus indicating that rsarch data of th siz of th public accountant. Th avrag valu of spcialization industrial auditors at manufacturing companis listd on th Indonsia stock xchang (IDX) in of 0,44 with standard dviation of to or gratr than th avrag valu, thus indicating that rsarch data of spcialization industry Auditors varis. Th avrag of valu audit tnur at manufacturing companis listd on th Indonsia stock xchang (IDX) in of 2.6 with a standard dviation of or smallr than th avrag valu, thus indicating that th rsarch data audit of tnur dos not varis. Th avrag of valu of th quity cost of capital in th manufacturing companis listd on th Indonsia stock xchang (IDX) in of with a standard dviation of to or gratr than th avrag valu, thus indicating that th data th study of th quity cost of capital varis. Tabl 2 Frquncy and Prcntag of Dpndnt Variabl Variabl UKAP Big 4 Non Big 4 Sum SPES Spcialty Audit Non Spcialty Sum Tnur Audit lss yars Audit with yars Sum Frquncy Prcntag % % % % Sourc of Data Procssd 2017 Classic Assumption Tst 55.7 % 100 % 24.1 % 75.9 % 100 % A classic assumption tst rsult that includ a tst of normality, multicollinarity, htroskdastic, and autocorrlation ar prsntd in th tabl bllowd: Tabl Summary of Normality Tst Variabl Undstandar dizd Rsidual N 2 7 Kolmogo rov- Smirnov Z Sig. Dscri ption 0,60 0,05 Norma l Sourc of Data Procssd

5 Form tabl it is known that th Kolmogorov-Smirnov tst showd 0,05 significanc. So th rgrssion modl has a normal distribution. So in inclusion, normally distributd data and can mov on to nxt tst. Th nxt tst is th multicollinarity tabl shown bllow: Tabl 4 Summary of Multicollinarity Varia bl Tol ranc Varianc Inflation Factor (VIP) Dscription UKAP 0,806 1,240 No Problm Multicollinari ty SPES 0,925 1,181 No Problm Multicollinari ty Tnur 0,867 1,154 No Problm Multicollinari ty Sourc Data Of Procssd 2017 Basd on th abov tabl, th valu of tolranc all variabls ar abov 0,1 and th valu VIF is lss than 10 so that it can b concludd thr is no Multicollinarity btwn th variabls. Tabl 5 Summary of Htroskdastic Variabl Sig Std Dscription UKAP 0,52 1 0,0 5 No Problm Htroskdasti c SPES 0,44 0,0 5 No Problm Htroskdasti Tnur 0,2 2 BME 0,20 0,0 5 0,0 5 c No Problm Htroskdasti c No Problm Htroskdasti c Sourc of Data Procssd 2017 Basd on th tabl not that th rsults of th htroskdastic on th valu Sig Taild is gratr than 0,05 so it can b said that thr ar no problm htroskdasticity. Autocorrlation tst th rsult can b sn in th tabl bllowd: D W 2,0 00 Tabl 6 Summary of Autocorrlation Du dl 4- du 1,76 1,81 2, dl 2,18 7 Dscription No Problm Autocorrlat ion Sourcd of Data Procssd 2017 From tabl 6 abov known valus of dl is 1,76 and du is 1,81 and valu of 4-dU is 2,187 and 4-dL is 2,27. From th calculation of th valu of DW= 2,000 btwn du=1,76 and 4- du=2,27, so that it can b concludd thr is no autocorrlation. Tabl 7 Summary of F Tst F count Sig. F tabl Dscription 7,45 0,000 2,640 Accptd Sourcd of Data Procssd 2017 Basd on th abov tabl, th valu of F is count 7,45. Th valu of F tabls rtrivd from tabl statistic F tst with sig 0,05 with df 1 (numbr variabls-1) = (4-1)= df2 obtaind from (n-k-1) = = 22 (n is th numbr of data and k is th numbr of indpndnt variabls). Th rsult obtaind for F count was 7,45 > F tabl valu 2,640, thn accptd th H1 and Ho ar rjctd. Tabl 8 Summary of t Tst UKAP Variabl t Sig Stand ar Dscripti on (Constan - 0,00 0,05 t) 9,250 UKAP - 2,027 0,01 0,05 Accptd Sourcd of Data Procssd

6 Basd on a tst of t, th t valu obtaind of indicats that th siz of th public accountant has a ngativ dirction and obtaind th valu of Standart < 0.05 (0.01 < 0.05) thn th Ha rcivd. It can conclud that th siz of th public accountant significantly ngativ ffct on th quity cost of capital. Tabl 9 Summary of t Tst SPES Variabl t Sig Stan dart (Consta - 0,0 0,05 nt) 2,27 0 SPES - 0,0 1,972 Dscrip tion 0,05 Accpt d Sourc of Data Procssd 2017 Basd on a tst of t, th t valu obtaind of -1,972 indicats that th audit industris spcialty has a ngativ dirction and obtaind th valu of Standart < 0.05 (0.0 < 0.05) thn th Ha rcivd. It can conclud that th audit spcialty industris significantly ngativ ffct on th quity cost of capital. Tabl 10 Summary of t Tst Audit Tnur Variabl T Sig (Consta - 0,0 nt) 2,78 0 Tnur 1,72 0,2 1 Stan dar 0,05 Dscrip tion 0,05 Rjctd Sourcd of Data Procssd 2017 Basd on a tst of t, th t valu obtaind from 1.72 audits showd that tnur has a positiv dirction and obtaind th valu of sig of > 0.05 (0.212 > 0.05) thn Ha was rjctd. It can b conclud that th audit of tnur dos not affct significantly towards th cost of quity capital. Th rsult of multipl linar rgrssion analysis using SPSS can b sn th tabl bllowd: Tabl 11. Summary of Multipl linar Rgrssion Variabl B Sig (Constant) -2,27 0,00 UKAP -0,6 0,01 SPES -0,15 0,0 Tnur 1,174 0,21 Sourcd of Data Procssd 2017 Basd on th rsult of rgrssion analysis obtaind by th following quation : Y= X X X Dtrmination of cofficint of tst rsults can b sn in th tabl bllowd: R 0,7 60 Tabl 12 Summary of Adjustd R Squar R Squ ar 0,5 77 Adjus td R Squar Std. Error of th Estimat Dscripti on 0,527 0,8857 Influntial 52,7 % Sourc of Data Procssd 2017 From th tabl abov it can b sn th valu of R is 0,760. This mans that th corrlation btwn th siz of public accounting firm, audit industry spcialist and audit tnur against th cost of quity capital and that valu 0,527 approaching 1 mans going on th dpndnt variabls against th corrlation btwn indpndnt variabls. Whil th valu of R 2 obtaind was 0,527 or 52,7 % this mans that th prcntag of th contribution to th influnc of variabl siz of public accounting firm, audit industry spcialitis and audit tnur against th cost of quity capital 52,7 %, whil th rst is th influnc of th othr variabls that ar not includd in this rsarch. 61

7 Discussion a. Th ffct of siz public accounting firm on th cost of quity capital Th siz of th public accountant significantly ngativ ffct on th quity cost of capital. Th rsults of this rsarch ar consistnt with rsarch conductd by (Frnando, Abdl-Mguid, & Eldr, 2010), (Dsiliani & Miranto, 2015), (Stiawan & Daljono, 2014). This is bcaus th Big 4 only slcting th bst srvics in th audit. Th bst srvic it will giv ris to invstor confidnc. Trust givn this will rduc th cost of quity capital. Th public accounting firm of th Big 4 is a public accounting firm of a good quality, so it is assum that ownd auditor has th ability and attitud of indpndnc. As a rsult, thy tnd to b not in th intrvntion by rprsntativs of managmnt. b. Th ffct of auditor's industry spcialization on th quity cost of capital. Th auditor s industry spcialization significantly ngativ ffct on th quity cost of capital. Th rsults of this study ar in lin with rsarch (Hajiha & Sobhani, 2012), (Frnando, Abdl-Mguid, & Eldr, 2010), (Hrustya, 2012). According to Balsam & Krishnan (200) in (Hajiha & Sobhani, 2012) Stats that th auditor spcialists tnd to invst mor staff training and rcruitmnt srvics, information tchnology, and tchnology audit cutting dg than th Auditors of non-spcialists. An auditor who is a spcialist in th industry also tnds to hav an incntiv to protct thir rputation capital and avoid damag to rputation. c. Th ffct of audit tnur on th cost of quity capital Th audit tnur no ffct on th quity cost of capital. Th rsults of this study ar in lin with (Suparno & Kiswara, 201), (Dsiliani & Miranto, 2015), (Arta & Sari, 201). According (Dsiliani & Miranto, 2015) stating that thr is an indication of a positiv rlationship btwn audit tnur with quity cost of capital. Basd on th rsults of th audit of rsarch, tnur can nlarg quity cost of capital. Th old Allianc auditor 's assssmnt can lad to a growing bias against th potntial risk of th company can valuatd invstors incrasd mor than xpctd rat of rturn incrasd. Conclusion Th rsults of tsting hypothss 1 and 2 which Stats th siz of th public accountant to th quity cost of capital, and industrial spcialtis auditor ffct on quity capital costs supportd by mpirical vidnc with a lvl of significanc of 5%. Th rsults of this study indicat that (1) siz accountant public firm Big 4 prioritizs th bst srvics in th audit. Th bst srvic it will giv ris to invstor confidnc. Trust givn this will rduc th cost of quity capital. (2) Spcialty industry Auditors usually hav a lot of clints ngagd in th sam fild will hav a lot of xprinc and undrstanding of th spcial audit risks in th industry that can rduc th cost of quity capital. () Th Audit of tnur has no ffct on th quity cost of capital. This is in lin with rsarch (Suparno & Kiswara, 201), (Dsiliani & Miranto, 2015) and (Arta & Sari, 201) thr is an indication of a positiv rlationship btwn audit tnur with quity cost of capital. Th old Allianc auditor 's 62

8 assssmnt can lad to a growing bias against th potntial risk of th company so can valuatd invstors incrasd mor than xpctd th rat of rturn incrasd. Th company is xpct to furthr raliz th importanc of th quality of an audit in th futur so that conflicts btwn ownrship and control that may caus th information asymmtry and th problms that incras th cost of capital rqustd by an invstor can b ovrcom. Th company can fix ths conflicts by publishing crdibl financial statmnts. Suggstions that furthr rsarch is ndd to dvlop th nxt can do is rsarch sampling not only from th manufacturing company but also othr industris such as LQ45, ral stat, banking or tlcommunications and incrasd rsarch into th priod of 5 yars, so that subsqunt rsarch rsults bttr. 5. REFERENES Arta, D. U., & Sari. (201). Kualitas Audit Dan Biaya Modal Ekuitas Prusahaan Manufaktur Yang Trdaftar Di Bursa Efk Indonsia. Univrsitas Sumatra Utara Journal Of Accounting, 1-7. Chang, C. S., Wong, W. T., & Chang, C. Y. (2011). Intgration of Projct-Basd Larning Stratgy with Mobil Larning : Cas Study of Mangrov Wtland Ecology Exploration Projct. Tamkang Journal of Scinc and Enrgy, 14 (), DAnglo, L. (1981). Auditor siz and auditor quality. Journal of Accounting and Economics,Vol. No., Dsiliani, N., & Miranto, W. (2015). Pngaruh Ukuran Kantor Akuntan Publik, Spsialisasi Industri Auditor Dan Audit Tnur Pada Biaya Modal Ekuitas ( Studi Empiris Pada Prusahaan Yang Trdaftar di Bursa Efk Indonsia Tahun ). Dipongoro Journal Of Accounting Vol 4 No 1, 1-8. Frnando, G. D., Abdl-Mguid, A. M., & Eldr, R. J. (2010). Audit Quality Attributs, Clint Siz And Cost Of Equity Capital. Rviw Of Accounting And Financ, Hajiha, Z., & Sobhani, N. (2012). Audit Quality And Cost Of Equity Capital: Evidnc Of Iran. Intrnational Rsarch Journal Of Financ And Economics, Hrustya, A. (2012). Dapatkah Kualitas Audit Mngurangi Biaya Modal Ekuitas Ex- Ant? Jaai Volum 16 No 1, Houq, M. N., Ahmd, K., & Zijl, T. V. (2011). Audit Quality, Earnings Managmnt, And Cost Of Equity Capital: Evidnc From India Jnsn, M., & Mckling, W. (1976). Thory Of Th Firm, Managrial Bhaviour, Agncy Costs & Ownrship Structur. Journal Of Financial Economics, Khurana, I., & Raman, K. (2004). Litigation Risk And Th Financial Rporting Crdibility Of Big 4 Vrsus Non-Big 4 Audits: Evidnc From Anglo- Amrican Countris. Th Accounting Rviw, Vol. 79 No. 2,

9 Kirana, P. A. (201). Pngaruh Kualitas Audit Trhadap Cost Of Equity Capital (Studi Empiris Pada Prusahaan Yang Trdaftar Di Bursa Efk Indonsia Tahun 2011). Dipongoro Of Journal Of Accounting, Li, Y., Stoks, D., Taylor, S., & Wong, L. (2009). Audit Quality, Accounting Attributs And Th Cost Of Equity Capital Stiawan, J. A., & Daljono. (2014). Pngaruh Kualitas Audit Trhadap Manajmn Laba Dan Biaya Modal Ekuitas. Dipongoro Journal Of Accounting, 1-9. Suparno, D. P., & Kiswara, E. (201). Analisis Hubungan Antara Atribut Kualitas Audit Dngan Biaya Modal Ekuitas. Dipongoro Journal Of Accounting,