Abstract
This research aims to examine the influence of product market competition on audit fees and the role of auditor industry specialization as a moderating variable. Using probability sampling method, 1,018 non-financial companies listed on Indonesia Stock Exchange from 2014 to 2018 were selected as research samples. Multiple linear regression was used to analyzed the data. The results showed that product market competition has a negative significant effect on audit fees, while auditor industry specialization has a positive significance or weakens the relationship between product market competition and audit fees. In other words, auditor industry specialization stimulates the increase audit fees even in a competitive market.
Highlights
Chen et al (2019) and Leventis et al (2011)found that high level of product market competition (PMC) has a positive significant effect on audit fee
The results showed that PMC has a significantly negative effect on audit fees
This result is supported by Chen et al, (2019) who examined the effect of Product market competition (PMC) on audit fees in China on 6,709 companies for the period 2007-2011
Summary
Found that high level of product market competition (PMC) has a positive significant effect on audit fee. Wang & Chui (2015) showed a different result where PMC has a negative significance to audit fees as PMC will increase the business risk. This occurs because companies in the competitive industry will continue to innovate to create competitive advantages to maintain their presence in the Nisrina/Jurnal Dinamika Akuntansi dan Bisnis Vol 8(1), 2021 pp 91-104 market. Casterella et al (2004) found that one form of competitive strategies is the use of auditor industry specialization in the audit process to provide higher audit quality This result inconsistency indicates a gap literature. The purpose of this study is to examine the influence of PMC on audit fees between companies using auditor industry specialization and non-auditor industry specialization
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