Determinants of Audit Quality in Food and Beverage Companies: The Role of Audit Tenure and Auditor Reputation
DOI:
https://doi.org/10.55657/jpmb.v5i01.300Keywords:
Audit tenure, auditor reputation, audit quality, fixed effect modelAbstract
This study examines the effect of audit tenure and auditor reputation on audit quality using panel data analysis. The study aims to provide empirical evidence on whether prolonged auditor-client relationships and auditor reputation influence audit outcomes. The findings reveal that audit tenure has a negative and significant effect on audit quality, indicating that longer auditor engagement may reduce independence and compromise audit quality. In contrast, auditor reputation shows no significant effect, suggesting that reputation alone does not guarantee higher audit quality. Simultaneously, both variables significantly influence audit quality, with the model explaining 57.95% of its variation. These results imply that regulators and firms should carefully consider auditor rotation policies to maintain auditor independence and improve audit quality. This study contributes to the audit literature by providing evidence from panel data analysis on the relative importance of auditor tenure and reputation in determining audit quality.
References
Alfraih, M. M. (2016). Corporate governance mechanisms and audit quality. Journal of Financial Regulation and Compliance, 24(2), 167–182.
Almutairi, A. R., Dunn, K., & Skantz, T. (2009). Auditor tenure, auditor specialization, and information asymmetry. Managerial Auditing Journal, 24(7), 600–623.
Bursa Efek Indonesia. (2024). Annual statistics and listed companies reports.
Carey, P., & Simnett, R. (2006). Audit partner tenure and audit quality. The Accounting Review, 81(3), 653–676.
Chi, W., Huang, H., Liao, Y., & Xie, H. (2009). Mandatory audit partner rotation and audit quality. Contemporary Accounting Research, 26(2), 359–391.
DeFond, M. L., & Zhang, J. (2014). A review of archival auditing research. Journal of Accounting and Economics, 58(2–3), 275–326.
Fitriany, F., Siregar, S. V., Martani, D., & Utama, S. (2016). Impact of audit tenure, auditor rotation, and audit firm size on audit quality: Evidence from Indonesia. Asian Journal of Accounting Research, 1(1), 20–42.
Francis, J. R. (2011). A framework for understanding and researching audit quality. Auditing: A Journal of Practice & Theory, 30(2), 125–152.
Gul, F. A., Fung, S. Y. K., & Jaggi, B. (2009). Earnings quality and auditor tenure. Journal of Accounting and Economics, 47(3), 265–287.
Habib, A., & Bhuiyan, M. B. U. (2011). Audit firm industry specialization and audit quality. Journal of International Accounting, Auditing and Taxation, 20(1), 32–44.
International Accounting Standards Board. (2018). Conceptual framework for financial reporting. IFRS Foundation.
International Auditing and Assurance Standards Board. (2016). Handbook of international quality control, auditing, review, other assurance, and related services pronouncements. IFAC.
Jackson, A. B., Moldrich, M., & Roebuck, P. (2018). Mandatory audit firm rotation and audit quality. Accounting & Finance, 58(1), 177–202.
Khasharmeh, H., & Desoky, A. (2013). Audit tenure and audit quality: Evidence from Bahrain. Global Review of Accounting and Finance, 4(1), 38–49.
Knechel, W. R., Krishnan, G. V., Pevzner, M., Shefchik, L., & Velury, U. (2016). Audit quality: Insights from the academic literature. Auditing: A Journal of Practice & Theory, 35(1), 385–421.
Lennox, C., Schmidt, J., & Thompson, A. (2016). Why are expanded audit reports not informative to investors? Evidence from the UK. Review of Accounting Studies, 21(3), 1–42.
Ministry of Industry of the Republic of Indonesia. (2023). Food and beverage industry performance report.
Myers, J. N., Myers, L. A., & Omer, T. C. (2003). Exploring the term of the auditor–client relationship. The Accounting Review, 78(3), 779–799.
Oktapiani, N., Al Farisi, M. S., & Herawati, E. (2025). Halal Lifestyle, Awareness, and Consumer Behavior: Implications for the Halal Food Market in Dayeuh Village, Indonesia. JEKSYAH: Islamic Economics Journal, 5(1), 47-62.Otoritas Jasa Keuangan. (2022). Regulation on public accountant services. Jakarta: OJK.
Salehi, M., Moradi, M., & Paiydar, M. (2017). The effect of auditor characteristics on audit quality. Sari, N. Y., Wahyuni, E. S., & Zaki, K. (2026). Muslim Consumer Preferences for Halal Food Products: The Role of Halal Labels, Product Quality and Socio-Cultural Factors. Jeksyah: Islamic Economics Journal, 6(01), 10-24.International Journal of Law and Management, 59(5).
Sari, R., & Susanto, Y. K. (2018). Auditor reputation, audit tenure, and audit quality: Evidence from emerging markets.
Velte, P. (2020). The link between audit committee effectiveness and audit quality. Journal of Governance & Regulation, 9(3), 8–28.
Velte, P., & Loy, T. (2018). The impact of audit tenure on audit quality: Evidence from Germany. European Accounting Review, 27(4), 701–728.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Dui Rafika Ramadhani
This work is licensed under a Creative Commons Attribution 4.0 International License.
