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Factors that Determine Going Concern Opinions on Manufacturing Companies in Indonesia

JEL Classification System

M41, M42

Abstract

A going concern opinion is issued if the auditor doubts a company’s financial condition. Giving a going concern opinion can worsen the company in terms of gaining public trust and may even indicate bankruptcy. This study aims to provide empirical evidence of the effects of liquidity, leverage, profitability, audit quality, audit lag, and opinion shopping on the acceptance of going concern opinions in manufacturing companies listed on the Indonesia Stock Exchange from 2018 to 2020. The results showed that leverage and audit lag have a positive effect. This shows that companies with high debt ratios will likely experience financial distress and continuity. This is what the auditor considers in providing a going concern opinion. Companies that receive very long audit reports also indicate that the auditor needs time before issuing an audit opinion. The longer the time required for the auditor, the greater the possibility of receiving a going concern opinion. This shows that auditors tend to give a going concern opinion to companies with high leverage and take a long time to complete an audit report. Meanwhile, liquidity, profitability, audit quality, and opinion shopping do not affect the acceptance of going concern opinion.

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