Audit committee's effectiveness, board of commissioners' composition and the selection of external auditors: Evidence from Indonesia

Vania Rebecca, Desi Adhariani

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

This study examines the impact of the audit committee's effectiveness and the board of commissioners' composition on the selection of external auditors. The approach used is a quantitative method with logistic regression to analyze the influence of audit committee's effectiveness (measured by scoring) and board of commissioners' composition (consist of the proportion of independent commissioners, gender diversity, proportion of board of commissioners with interlocks, and total of the board members) on the external auditor selection. The results show that the audit committee's effectiveness and proportion of board of commissioners with interlocks has a positive impact towards the selection of Big 4 external auditor); while the presence of women in the board of commissioners has a negative impact. The other variables that have positive impact are firm size and profitability, meanwhile leverage does not have impact on Big 4 external auditor preference. Since the selection of external auditor represent the audit quality, the results from this study has a practical implication on the need to strengthen the corporate governance mechanisms in terms of the characteristics of board of commissioners to enhance the audit quality and hence the quality of financial statements of Indonesian companies.

Original languageEnglish
Title of host publicationProceedings of the 33rd International Business Information Management Association Conference, IBIMA 2019
Subtitle of host publicationEducation Excellence and Innovation Management through Vision 2020
EditorsKhalid S. Soliman
PublisherInternational Business Information Management Association, IBIMA
Pages6391-6405
Number of pages15
ISBN (Electronic)9780999855126
Publication statusPublished - 1 Jan 2019
Event33rd International Business Information Management Association Conference: Education Excellence and Innovation Management through Vision 2020, IBIMA 2019 - Granada, Spain
Duration: 10 Apr 201911 Apr 2019

Publication series

NameProceedings of the 33rd International Business Information Management Association Conference, IBIMA 2019: Education Excellence and Innovation Management through Vision 2020

Conference

Conference33rd International Business Information Management Association Conference: Education Excellence and Innovation Management through Vision 2020, IBIMA 2019
CountrySpain
CityGranada
Period10/04/1911/04/19

Keywords

  • Audit committee effectiveness
  • Composition of board of commissioner
  • External auditor

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