Revealing and Building the Professional Commitment of  Auditor Through Local Wisdom Perspective   of the Kaili Community

Azis, Nur Alimin; Indriasari, Rahayu

doi:10.37531/sejaman.v3i2.578

Cited by 1 publication

(2 citation statements)

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“…In terms of auditors' experience and work, audit partners from the main ethnicity tend to possess more extensive expertise due to their potential for interaction and idea exchange within their professional circles (Abdul Wahab et al, 2020;Abbott et al, 2003;Azis and Indriasari, 2020). Conversely, minority ethnic audit partners face limitations in creating such opportunities, as they often rely more on experiential learning gained through training and nonformal education.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

“…Indonesia is characterized by two distinct ethnic backgrounds: indigenous (pribumi) and nonindigenous. The indigenous ethnic groups are deeply rooted in local Indonesian culture without significant external cultural influences (nonacculturative process) (Azis and Indriasari, 2020; Niswatin and Mahdalena, 2016). On the other hand, nonindigenous ethnic groups, often referred to as modern ethnic groups, have emerged as a result of cultural assimilation outside of Indonesia (acculturative process), with the majority being of Chinese descent.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Does auditor ethnicity matter in determining audit fees? Some empirical evidence from Indonesia

Cahyono¹,

Harymawan²,

Wardani³

et al. 2023

ARJ

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Purpose This study aims to investigate the presence of the audit partner ethnicity on audit fees within the Indonesian context. Design/methodology/approach The sample consists of 803 firm-year observations from the Indonesia Stock Exchange during the period of 2014–2018. The study uses fixed-effect regression analysis to examine the relationship between audit partner ethnicity and audit fees. Findings This study reveals that firms audited by audit partners from the main ethnic group demonstrate lower audit fees, indicating a more extensive audit business network for this particular group of auditors compared to those from minority ethnic groups. Particularly, the study finds that firms audited by audit partners from the three largest ethnicities, namely, Balinese, Javanese and West Sumatranese, are associated with lower audit fees compared to others. These findings further contribute to the existing narrative and literature that highlight the ethnic background of audit partners as a form of social capital that influences lower audit fees. Research limitations/implications This study provides valuable practical and academic implications regarding the impact of audit partner ethnicity on audit fees. The findings highlight the importance for audit firms to strive for a balanced representation of ethnic diversity in their auditor characteristics, as it can positively influence both governance and marketing strategies. By recognizing and addressing the significance of ethnic diversity among audit partners, firms can enhance their overall effectiveness and success in the auditing profession. Originality/value This study makes a unique contribution by providing empirical data on audit pricing theory in Indonesia, specifically focusing on the role of ethnic diversity as a determinant of audit pricing. Previous research has not extensively explored the connection between auditor ethnicity and audit fees, particularly in relation to the business network as a channel mechanism. The theoretical explanations for the fee differentials have also been limited in prior studies. The current study addresses this gap by offering a theoretical basis that highlights the advantage of the dominant ethnic group in establishing an efficient audit market system. Consequently, these auditors are able to charge lower fees to clients without compromising on the quality of their services. This finding aligns with the existing literature on audit fees and underscores the importance of the main ethnic group in fostering an effective audit market, resulting in lower audit fees compared to mixed audit markets.

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Section: Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%