Effect of Audit Quality, Managerial Ownership to Earning Quality in the Banking Company in Indonesia Stock Exchange

Abstract

This study examines the effect of managerial ownership, the quality of audit on the earning quality in general companies listed in Indonesia Stock Exchange during the periode 2013 to 2016. The sample of this study is companies banking general while companies included in the sample research criteria are as many as 12 companies during 4 years of research so that the total samples are 48 companies.

The results of this study indicate significant results between independent variable and dependent variable showing that managerial ownership does not significantly affect the earning quality, because large ownership of shares by managerial can influence the managerial to perform income smoothing action. Furthermore, quality audit variables significantly influence the earning quality, the amount of audit fee, the auditor maintain integrity to apply a good audit procedure to detect the existence of material misstatement performed by the management so as to increase the quality of corporate profits.

The conclusion of this study indicates that managerial ownership variable has no significant effect to the variable of earning quality, then the audit quality variables with audit fee have a significant effect to earnings quality in banking companies registered in Indonesia Stock Exchange.