THE EFFECT OF AUDITOR QUALITY ON BOND RATING: THE TESTING OF “INFORMATION ROLE” AUDITORS IN INDONESIA

Sri, Wahyuni (2013) THE EFFECT OF AUDITOR QUALITY ON BOND RATING: THE TESTING OF “INFORMATION ROLE” AUDITORS IN INDONESIA. ARTIKEL JURNAL.

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Abstract

Measuring the company bond rating is important for the business nowadays. Auditor quality is considered an important factor. Therefore, it is important to see the effect of auditor quality on bond rating. The objective of this research is to investigate the relation between auditor quality characteristics (size, tenure and industry specialist auditors), and bond rating. Data used in this research are 1283 years-firm observation during 2000-2010. The results of this research find that auditor quality characteristics, auditor size and industry specialist auditor has a positive significant affect to bond rating, but auditor tenure not significant. The controlled variables as firm size, profitability, coverage, firm age, maturity, and bond size and bank debt are factored into firm’s bond rating by credit rating agencies. Overall, our result suggests that trough their role of providing information, auditor quality (size and specialist industry) are important factors for the market participants.

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