Mechanisms shaping audit quality: Empirical evidence on audit fees, audit tenure, firm size, and audit committees

Abstract

This study examines the effects of audit fees, audit tenure, and firm size on audit quality and investigates the moderating role of the audit committee among telecommunications companies listed on the Indonesia Stock Exchange. A quantitative approach was employed using secondary data from financial statements and annual reports covering 2020–2025. Through purposive sampling, 18 firms were selected, yielding 108 firm-year observations. The data were analyzed using panel data regression and, because of heteroskedasticity and extreme observations, robust least squares (M-estimation) in EViews 13. The novelty of the study lies in measuring audit quality through a weighted composite index integrating five dimensions—auditor reputation, audit opinion, going concern, audit delay, and restatement—and examining audit committee moderation within the telecommunications industry. The findings indicate that audit fees and audit tenure have no significant effect on audit quality, whereas firm size has a positive and significant effect. The independent variables jointly explain audit quality, while the audit committee does not significantly moderate the effects of audit fees, audit tenure, or firm size on audit quality. These findings suggest that organizational scale and capacity are more influential in determining audit quality than audit fees or the length of the auditor–client relationship. Practically, the findings highlight the need to strengthen auditor independence and professional skepticism and to enhance the substantive effectiveness of audit committees as a corporate governance mechanism.