Management Turnover and Auditor Switching: The Moderating Effect of Financial Distress
Abstract
This study examines the effect of management turnover on auditor switching, with financial distress as a moderating variable. The research employs panel least squares regression on a sample of firms, analyzing the direct and interaction effects between management turnover and financial distress. The findings reveal that management turnover has a significant positive effect on auditor switching, and this relationship is further strengthened when financial distress is present. The moderating role of financial distress highlights its importance in amplifying the likelihood of auditor switching during leadership transitions. The study concludes that organizations experiencing both management turnover and financial distress are more prone to auditor changes, underscoring the interplay between leadership dynamics and financial conditions. Limitations related to sample scope and reliance on secondary data are acknowledged, and future research is encouraged to explore broader contexts and incorporate additional variables such as corporate governance and regulatory influences.
References
Alisa, I. A., Devi, I. A. R., & Brillyandra, F. (2019). THE EFFECT OF AUDIT OPINION, CHANGE OF MANAGEMENT, FINANCIAL DISTRESS AND SIZE OF A PUBLIC ACCOUNTING FIRM ON AUDITOR SWITCHING. Jurnal Akuntansi Trisakti, 6(1).
Darmayanti, N. (2017). The effect of audit opinion, financial distress, client size, management turn and KAP size on auditor switching. Journal of Economics, Business, and Accountancy Ventura, 20(2).
Darmayanti, N., Africa, L. A., & Mildawati, T. (2021). THE EFFECT OF AUDIT OPINION, FINANCIAL DISTRESS, AUDIT DELAY, CHANGE OF MANAGEMENT ON AUDITOR SWITCHING. INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCE STUDIES, 13(1).
Dasman, S., Purnomo, G. G., & Wulandari, D. S. (2023). Macroeconomic Conditions, World Capital Market, and Commodity Price on The Jakarta Composite Index. Proceeding International Pelita Bangsa, 1(1), 155–162.
Djatnicka, E. W., Purba, J., & Wulandari, D. S. (2023). Fraud Triangle Perspective: Detecting Financial Statement Fraud Using the Beneish M-Score Model in Property and Real Estate Companies Listed on the Indonesia Stock Exchange. East Asian Journal of Multidisciplinary Research, 2(7), 3113–3130.
Fadhilia, W. (2017). Pergantian CEO, Penghindaran Pajak, Kompensasi Eksekutif dan Manajemen Laba Studi Kausalitas pada Perusahaan Manufaktur Indonesia. neliti.com. https://www.neliti.com/publications/202091/pergantian-ceo-penghindaran-pajak-kompensasi-eksekutif-dan-manajemen-laba-studi
Fianti, P. I., & Badjuri, A. (2023). Financial Distress as a Moderating Effect of Management Turnover, KAP Size, and Audit Fees on Auditor Switching in the Indonesian Stock Exchange. JURNAL AKUNTANSI DAN BISNIS : Jurnal Program Studi Akuntansi, 9(2).
Hayati, K., Sihotang, J., Lubis, A., & Halawa, D. (2021). The Effect of Institutional Ownership, Audit Opinion, KAP Reputation, Management Changes and Audit Delay on Auditor Switching. Journal Research of Social Science, Economics, and Management, 1(2).
Hidayat, T., Yahya, A., & Permatasari, M. D. (2023). Pengaruh Financial Distress , Inflasi, dan Nilai Tukar Terhadap Keputusan Investasi serta Implikasinya Pada Nilai Perusahaan. Jurnal Akuntansi Bisnis Pelita Bangsa, 8(1), 1–14. https://doi.org/https://doi.org/10.37366/akubis.v8i01.744
Khan, M., Srinivasan, S., & Tan, L. (2017). Institutional Ownership and Corporate Tax Avoidance: New Evidence. The Accounting Review, 92(2), 101–122. https://doi.org/10.2308/accr-51529
Layli, M., & Arifin, J. (2020). PENGARUH KOMPETENSI, INDEPENDENSI, DAN KEMAHIRAN PROFESIONAL TERHADAP KUALITAS AUDIT. Jurnal Perilaku dan Strategi Bisnis, 8(2), 152. https://doi.org/10.26486/jpsb.v8i2.1310
Lee, R.-J., & Kao, H.-S. (2018). The Impacts of IFRSs and Auditor on Tax Avoidance.
Monika, C., & Noviari, N. (2021). The Effects of Financial Distress, Capital Intensity, and Audit Quality on Tax Avoidance. American Journal of Humanities and Social …, Query date: 2023-01-22 19:43:00. https://www.ajhssr.com/wp-content/uploads/2021/06/ZL2156282287.pdf
Palanca, T. J., & Zamudio, I. G. (2013). AN ANALYSIS OF THE AGENCY PERSPECTIVE ON TAX AVOIDANCE AND FIRM VALUE UNDER DIFFERENT CORPORATE GOVERNANCE STRUCTURES: THE CASE OF FIRMS IN THE PHILIPPINE STOCK EXCHANGE. Presented at the Research Congress 2013 De La Salle University Manila.
Susanto, Y. K. (2018). AUDITOR SWITCHING: MANAGEMENT TURNOVER, QUALIFIED OPINION, AUDIT DELAY, FINANCIAL DISTRES. International Journal of Business, Economics and Law, 15(5).
Wijaya, E., & Santoso, T. J. (2019). Financial Distress as a Determinant of Tax Aggressiveness in Indonesia. Journal of Business and Taxation Research, 8(1), 45–58.
Wulandari, D. S., & Anggraeni, D. (2024). Synergies and Conflicts: Examining the Effects of Mandatory Disclosure Rules on Corporate Governance Structures and Functions with Audit Committee as a Moderating Variable. Journal of Applied Accounting and Taxation, 9(2).
Wulandari, D. S., Muslim, A. B., & Rahmayani. (2024). Enhancing Financial Transparency: Assessing the Influence of Ownership Structure, Managerial Ownership, and Audit Committee on Financial Statement Integrity with Audit Quality as a Moderator. Proceedings The Fifth International Research Conference on Management and Business (5 Th IRCMB). https://ircmb.org/galerry/proceedings-2024/
Wulandari, D. S., Purba, J., & Wijayanti, R. (2024). Financial Distress and Accounting Conservatism On Tax Avoidance. Akuisisi: Jurnal Akuntansi, 20(2).
Wulandari, D. S., Wibowo, E. T., & Ricardo, P. (2023). Machiavellian, Equity Sensitivity, and Law Enforcement on the Perception of Tax Evasion Ethics. East Asian Journal of Multidisciplinary Research, 2(9).
Yahya, A., Affandi, A., Herwani, A., Hermawan, A., & Suteja, J. (2024). Herding Behavior in the Sharia Capital Market on Investment Decisions. Jrak, 16(1), 107–118. https://doi.org/10.23969/jrak.v16i1.12172
Yahya, A., Asiah, N., & Nurjanah, R. (2023). Tax Avoidance in Relationship on Capital Intensity, Growth Opportunities, Financial Distress and Accounting Conservatism. Journal of Business Management and Economic Development, 1(02), 154–165. https://doi.org/10.21070/acopen.8.2023.3643
Yahya, A., & Cahyana, D. (2020). Determinan Audit Report Lag (Studi Empiris Pada Perusahaan LQ-45 Tahun 2014-2018). Akuntansi Dewantara, 4(2). https://doi.org/10.26460/AD.v4i2.8384
Zarefar, A., Oktari, V., & Zarefar, A. (2019). The Effect of Financial Distress, Management Turnover, Audit Opinion and Reputation of Public Accounting Firm to Auditor Switching. Research Journal of Finance and Accounting, 10(22).
