Profitability, Audit Quality, and Firm Value: Case on Indonesian Manufacturing Companies

Abstract

This study will examine the effect of profitability on firm value with audit quality as a moderating variable. This research was conducted at the manufacturing firm listed on the Indonesian capital market in 2013-2017. The population in this study are all manufacturing firm listed on the Indonesian capital market. The research sample was obtained by using the purposive method. The research data were analyzed moderated regression analysis. The results of this study indicate that; 1) profitability has a positive effect on the value of manufacturing firms on the Indonesian capital market, 2). Audit quality strengthens the effect of profitability on the value of a manufacturing firm on the Indonesian capital market. This research proves that there is a positive response from investors in the Indonesian capital market on reporting earnings from companies audited by the big four public accounting firms.