AUDIT OPINION, FINANCIAL DISTRESS AND FIRM SIZE ON AUDITOR SWITCHING: EVIDENCE FROM EMERGING MARKETS IN INDONESIA

Abstract

The phenomenon of auditor switching in emerging market countries is attracting increasing
attention, particularly amidst economic uncertainty and information asymmetry, which are driving
companies to be more cautious in maintaining the credibility of their financial reports. Food and beverage
manufacturing companies in Indonesia are required to maintain investor trust by ensuring high-quality
financial reports.
In line with this phenomenon, this study aims to analyze the impact of audit opinion, financial
distress, and firm size on auditor switching. This study uses a quantitative, associative approach and
analyzes panel data using EViews 10 software. The data used are financial statements and annual reports
from 2020 to 2024, covering 28 companies with a total of 140 observations.
This study shows that audit opinion significantly influences a company's decision to switch
auditors, but financial distress and company size do not. This suggests that auditor switching is more
influenced by the audit opinion outcome than by financial distress and company size.
Companies are encouraged to improve the quality of their financial reports and maintain
professional relationships with their auditors. This is crucial for obtaining a good audit opinion and
increasing investor confidence in the market.