Philippine E-Journals

Corporate Governance Mechanism, Audit Quality, and Accrual Quality: Indonesia Manufacturing Company Evidence

Aloysius Harry Mukti | Ratna Wardhani

 

Abstract:

This study examines the influence of implementation of corporate governance mechanism and audit quality toward accrual quality of the corporation. The implementation of corporate governance mechanism uses three measures: the effectiveness of the audit committee, board effectiveness and family ownership structure. For audit quality, the measurement uses two approaches: amount of audit fee and grouping the company into two groups (audited by the auditor big-4 and audited by auditor non big-4). The study was conducted among selected manufacturing companies in Indonesia, during the period 2007-2009. Based on the results of the study, only the board of Commissioners and grouping the company into two group (audited by the auditor big-4 and audited by auditor non big-4 experience) as a proxy of audit quality significantly improved quality of accrual.