THE INFLUENCE OF AUDIT OPINION TO THE COMPANY STOCK PRICE

Abstract

ABSTRACT

From the results of previous studies there are still different conclusions about the influence of audit opinion on stock prices. Some studies concluded that the influence of audit opinion on stock prices are significant, whereas other studies concluded that audit opinion did not significantly influence stock prices. The purpose of this research is to study the influence of audit opinions contained in the audit report on the firm stock prices. Corporate profit and firm size are added to the research model as control variables. The samples are companies listed on the Indonesia Stock Exchange classified as LQ 45. 18 (Eighteen) companies are used as research samples with panel data. Measurements were made to 4 (four) variables in the research model. The data used are secondary data taken from the Indonesia Stock Exchange database and firms’ annual reports. The result of this research shows that the influence of audit opinion on stock prices is not significant. Reports of the audit results turned out to be underutilized by potential investors in the decision-making process. From a signalling theory point of view, the audit report does not provide useful information to potential investors. This situation may be due to the condition of the Indonesian stock market where most of the potential investors do not understand the meaning of the auditor's opinion. Conversely, corporate earnings have a very significant effect on stock price movements.

Key Words: Audit Opinion, Company Profit, Firm Size, Stock Price, Signaling Theory