e-ISSN 2518-1181
DOI 10.33146/2518-1181
Online Media ID R40-06293
← Back Published: 30.12.2025

The Contribution of PAF Industry Specialization to the Audit Quality Metric Score and Implications for the Tobin’s Q of Manufacturing Firms

Authors

T Husain Widuri Institute of Social and Technology, Jakarta, Indonesia ORCID 0000-0003-0287-2980
Nor Balkish Zakaria Universiti Teknologi MARA, Selangor, Malaysia ORCID 0000-0002-1795-9854

DOI:

https://doi.org/10.33146/2518-1181-2025-4(110)-133-143

Abstract

In the context of the growing complexity of the business environment for manufacturing enterprises, the industry specialisation of auditors is becoming a key factor that potentially increases the quality of audits. This study aims to empirically verify the contribution of Public Accounting Firm (PAF) industry specialisation to audit quality, measured by the Audit Quality Metric Score (AQMS), and to examine its implications for firm value in Indonesian manufacturing companies using Tobin’s Q as a proxy. The research sample comprises 126 manufacturing companies registered at the Indonesian Stock Exchange (IDX) between 2022 and 2024. For the analysis, the authors collected data from annual financial reports available on the IDX website (www.idx.co.id) and company websites. Data analysis includes descriptive statistics, multiple regression analysis, and linearity tests for model specification, as well as hypothesis-testing model verification. The results show that PAF industry specialisation plays a highly significant role in determining audit quality, accounting for 95.17% of the variance in AQMS. Thus, specialised auditors possess superior industry knowledge and competence, which translates into stronger audit quality outcomes. At the same time, audit quality has only a very weak negative effect on firm value. Thus, although audit quality is important for governance, firm value is more influenced by external factors such as economic conditions, managerial decisions, industry performance, and investor expectations. To increase public confidence in audit results, regulatory authorities should ensure that audit services for specific industries are provided by specialised audit firms whose representatives possess the necessary industry-specific expertise. In turn, companies can receive more practical recommendations from specialised auditors on improving financial reporting indicators or correcting errors. Investors should remember that audit quality cannot be a sole indicator in assessing a firm’s value, as its influence is often weak and indirect.

Keywords

audit quality, PAF industry specialization, firm’s value, Tobin’s Q, manufacturing firms in Indonesia
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