Factors Affecting KAP Substitution

Oct 13, 2025 by leolavanderia.com.br 73 views

Analysis of Factors Affecting the Substitution of Public Accounting Firm (KAP) in Property and Real Estate Companies Listed on the Indonesia Stock Exchange (IDX)

In the ever-evolving business landscape, especially in the property and real estate sectors listed on the Indonesia Stock Exchange (IDX), the change of public accounting firm (KAP) is a common occurrence. This phenomenon has sparked the interest of researchers and stakeholders alike, leading to a comprehensive study examining the effect of various factors on the replacement of KAP. This article delves into the findings of the study, highlighting the significant factors that influence the substitution of KAP in property and real estate companies listed on the IDX.

Factors Affecting KAP Substitution

The study employed secondary data and involved 42 companies with a total of 210 observations from 2010 to 2014. The analysis revealed that several factors have a significant impact on the replacement of KAP, while others do not.

KAP Size

The size of the KAP plays a crucial role in determining the quality of the audit service provided. Companies that use large KAPs usually benefit from the reputation and experience of the KAP. In this study, the size of the KAP was proven to have a significant influence on the replacement of the KAP. This shows that the company prefers to move to a bigger KAP in order to get better and more trusted services. A larger KAP size is associated with higher quality audit services, which is a key factor in the decision to replace the KAP.

Institutional Ownership

Institutional ownership is also a significant factor that affects the replacement of KAP. Companies with high levels of institutional ownership tend to be more transparent and have greater accountability. This can encourage companies to change the KAP to remain in accordance with the expectations and demands of the institutional shareholders. Institutional ownership is a key driver of transparency and accountability, which in turn influences the decision to replace the KAP.

Management Replacement and Audit Opinion

Meanwhile, management replacement factors and audit opinion do not show a significant effect on the replacement of the KAP in this study. Although management changes are often expected to bring changes in the company's strategy, this does not always have implications for the replacement of KAP. Likewise with audit opinion, although it is important, it is not strong enough to encourage companies to replace the KAP if other factors remain conducive. Management replacement and audit opinion are not significant factors in the decision to replace the KAP.

Leverage and Changes in the Percentage of ROA

Leverage and changes in the percentage of Return on Assets (ROA) also have no significant influence on the decision of the KAP. This may be caused by the company's approach in managing debt and profitability, which is not always directly related to the need to replace auditors. Leverage and changes in ROA are not significant factors in the decision to replace the KAP.

Client Size and Company Growth

The client's size and company growth were also not significant in influencing the replacement of the KAP. This shows that although the size and growth of the company can provide an overview of financial stability, both are not always related to the decision to replace the KAP. Client size and company growth are not significant factors in the decision to replace the KAP.

Conclusion

Overall, this research indicates that only the size of the KAP and institutional ownership have a significant impact on the replacement of KAP in the property and real estate companies listed on the IDX. This highlights the importance of the company to consider these factors in determining their auditors, while showing that not all factors are considered important to have a real influence on the decision. The size of the KAP and institutional ownership are the key drivers of the decision to replace the KAP.

By understanding the factors that influence the replacement of KAP, companies can make better decisions in the selection of auditors that not only meet the standards, but can also provide added value in terms of quality and reputation. This study provides valuable insights for stakeholders in the property and real estate sectors in understanding the dynamics involved in their relationship with the auditor. This study provides a comprehensive understanding of the factors that influence the replacement of KAP, which can inform better decision-making in the selection of auditors.

Recommendations for Future Research

This study provides a foundation for future research in the area of KAP substitution. Some potential areas for future research include:

Investigating the impact of KAP size on audit quality: This study found that KAP size has a significant impact on the replacement of KAP. Future research could investigate the relationship between KAP size and audit quality.
Examining the role of institutional ownership in KAP substitution: This study found that institutional ownership is a significant factor in the decision to replace the KAP. Future research could investigate the mechanisms through which institutional ownership influences KAP substitution.
Investigating the impact of management replacement on KAP substitution: This study found that management replacement does not have a significant impact on the replacement of KAP. Future research could investigate the relationship between management replacement and KAP substitution.

By building on the findings of this study, future research can provide a more comprehensive understanding of the factors that influence KAP substitution, which can inform better decision-making in the selection of auditors.
Frequently Asked Questions (FAQs) about the Analysis of Factors Affecting the Substitution of Public Accounting Firm (KAP) in Property and Real Estate Companies Listed on the Indonesia Stock Exchange (IDX)

Q: What is the main objective of the study?

A: The main objective of the study is to analyze the factors that affect the substitution of public accounting firm (KAP) in property and real estate companies listed on the Indonesia Stock Exchange (IDX).

Q: What are the factors that were examined in the study?

A: The study examined the following factors:

KAP size
Institutional ownership
Management replacement
Audit opinion
Leverage
Changes in the percentage of Return on Assets (ROA)
Client size
Company growth

Q: What were the findings of the study?

A: The study found that only two factors have a significant impact on the replacement of KAP:

KAP size
Institutional ownership

The other factors examined in the study did not have a significant impact on the replacement of KAP.

Q: What does the study suggest about the importance of KAP size?

A: The study suggests that KAP size is an important factor in the decision to replace the KAP. Companies that use large KAPs tend to benefit from the reputation and experience of the KAP, which can lead to better audit services.

Q: What does the study suggest about the importance of institutional ownership?

A: The study suggests that institutional ownership is an important factor in the decision to replace the KAP. Companies with high levels of institutional ownership tend to be more transparent and have greater accountability, which can lead to a greater demand for high-quality audit services.

Q: What are the implications of the study for property and real estate companies listed on the IDX?

A: The study suggests that property and real estate companies listed on the IDX should consider the size of the KAP and institutional ownership when making decisions about the replacement of the KAP. This can help ensure that the company selects a KAP that provides high-quality audit services and meets the expectations of institutional shareholders.

Q: What are the implications of the study for stakeholders in the property and real estate sectors?

A: The study provides valuable insights for stakeholders in the property and real estate sectors, including investors, regulators, and other stakeholders. The study highlights the importance of considering the size of the KAP and institutional ownership when evaluating the quality of audit services provided by a KAP.

Q: What are the limitations of the study?

A: The study has several limitations, including:

The study only examined a limited number of factors that may affect the substitution of KAP.
The study only examined a limited number of companies listed on the IDX.
The study did not control for other factors that may affect the substitution of KAP.

Q: What are the recommendations for future research?

A: The study recommends that future research should:

Investigate the impact of KAP size on audit quality.
Examine the role of institutional ownership in KAP substitution.
Investigate the impact of management replacement on KAP substitution.