The Impact of Audit Fees, Public Accounting Firm (PAF) Reputation, and Corporate Leverage on Audit Quality in Firms Conducting Online Sales

Abstract

This study investigates the effect of audit fees, public accounting firm (PAF) reputation, and corporate leverage on audit quality in online-based retail companies listed on the Indonesia Stock Exchange (IDX) from 2021 to 2024. A quantitative approach with balanced panel data was applied, using purposive sampling to select 14 firms over four years. Audit quality was proxied by absolute discretionary accruals (ABSD), while the independent variables included audit fees (natural log), PAF reputation (Big Four dummy), and debt-to-equity ratio (DER). Panel regression analysis was conducted, supported by classical assumption tests. The findings indicate that audit fees and corporate leverage have a statistically significant impact on audit quality, whereas PAF reputation does not. These results suggest that audit quality is primarily driven by financial incentives and risk exposure rather than institutional auditor branding. The study underscores the importance of enhancing audit fee regulations, ensuring rigorous audit procedures for highly leveraged firms, and rethinking audit quality indicators in digitally transformed financial environments.

Keywords: audit quality, audit fees, PAF reputation, corporate debt, online retail companies