Exploring the Financial Performance on Audit Quality: Insights from Automotive Companies on the Indonesia Stock Exchange

Audit quality is a fundamental element in ensuring the credibility of financial statements, particularly in Indonesia’s automotive industry. Although important, empirical evidence examining specific financial factors that influence audit quality remains limited, especially in the context of this industry. This study addresses this gap by examining the impact of key financial ratios namely Return on Assets (ROA), Return on Equity (ROE), Current Ratio (CR), and Debt to Equity Ratio (DER) on audit quality at automotive companies listed on the Indonesia Stock Exchange between 2021 and 2024. Using a quantitative approach and logistic regression analysis via SPSS, this study utilizes secondary data collected from annual reports and audited financial statements. This study employed a purposive sampling method and included 10 companies that met specific criteria such as currency usage, sector classification, and data availability. The findings indicate that among the four independent variables tested, only the Debt to Equity Ratio had a statistically significant effect on audit quality, with an odds ratio indicating a strong positive effect. Conversely, ROA, ROE, and CR did not show significant effects, likely due to multicollinearity or sample-specific limitations. These results suggest that high leverage increases the likelihood of improved audit quality, likely due to stricter oversight by auditors. JEL classification numbers: M42, G17, C22.