The Effect of Earnings Quality, Audit Committee, and Audit Tenure on Firm Value

Abstract

Firm value is an important indicator of market confidence and corporate performance, particularly in the consumer non-cyclicals sector, where companies face changing market conditions, regulatory pressures, and increasing demands for credible financial reporting and effective corporate governance. Therefore, identifying financial reporting and audit-related factors that may influence firm value is increasingly important for investors, management, and other stakeholders. This study aims to empirically examine the effect of earnings quality, audit committee, and audit tenure on firm value in consumer non-cyclicals sector companies listed on the Indonesia Stock Exchange during 2020–2024. The population of this study consisted of all consumer non-cyclicals sector companies listed on the Indonesia Stock Exchange during the observation period. A quantitative associative research design was employed using secondary data obtained from annual reports and financial statements. Purposive sampling resulted in 13 companies with 65 firm-year observations. Panel data regression analysis was conducted using EViews 12. The results show that earnings quality, audit committee, and audit tenure simultaneously have a significant effect on firm value (p < 0.001), with an adjusted R² value of 0.9383. Partially, earnings quality has no significant effect (β = -0.042980; p = 0.4615), and the audit committee also has no significant effect (β = 0.020315; p = 0.9773). In contrast, audit tenure has a significant negative effect on firm value (β = -0.118660; p = 0.0223). Overall, the findings indicate that audit tenure represents a more influential factor in explaining firm value compared with earnings quality and audit committee size. Companies should therefore maintain auditor independence and appropriately manage audit tenure to strengthen financial reporting credibility and market confidence.