The Influence of Leverage, Financial Distress, Management Strategy and Company Growth on Audit Opinions

Robet MUSLIH; Hermanto HERMANTO

doi:10.38142/jtep.v5i4.1478

Authors

Robet MUSLIH Esa Unggul University, Indonesia
Hermanto HERMANTO Esa Unggul University, Indonesia

DOI:

https://doi.org/10.38142/jtep.v5i4.1478

Keywords:

Audit Opinion, Leverage, Financial Distress, Company Growth, Company Size, Management Strategy

Abstract

This study aims to analyze various factors that influence auditors in issuing going concern opinions on manufacturing companies in the food and beverage subsector listed on the Indonesia Stock Exchange. During the period 2019 to 2024. The main focus of the study is directed at five independent variables, namely Leverage, financial distress, management strategy, company growth, and company size. A quantitative approach is used in this study with the logistic regression analysis method. The research sample consists of 49 companies with a total of 294 annual observations collected from audited financial statements. Based on the analysis results, the five variables studied together are able to build a significant prediction model for the issuance of going concern opinions by auditors. Partially, management strategy as measured by Price to Book Value (PBV) is proven to have a positive and significant influence on the likelihood of a company obtaining an auditor's going concern opinion. It is also influenced by several factors, one of which is company size which is proven to have a significant impact in the determination process, but in a negative direction. Meanwhile, Leverage, financial distress, and company growth do not show a statistically significant influence, although they remain contextually relevant in the context of audit risk evaluation. These findings provide a significant contribution to enhancing auditors' understanding of the factors influencing business continuity. This research also offers practical implications for corporate management in improving the quality of strategic decision-making and risk management to maintain business continuity amidst complex economic dynamics.

References

Agnes, D. (2020). Analisis Ukuran Perusahaan, Pertumbuhan Perusahaan, Financial Distress dan Likuiditas terhadap kecenderungan penerimaan Opini Audit Going Concern. JCA Ekonomi, 1(1985), 1–10.

Alam, T. M., Shaukat, K., Mushtaq, M., Ali, Y., Khushi, M., Luo, S., & Wahab, A. (2021). Corporate Bankruptcy Prediction: An Approach towards Better Corporate World. Computer Journal, 64(11), 1731–1746. https://doi.org/10.1093/comjnl/bxaa056

Alexeyeva, I., & Sundgren, S. (2022). Do going concern disclosures in the management report and audit report signal bankruptcy risk? Evidence from privately held firms. International Journal of Auditing, 26(2), 171–192. https://doi.org/10.1111/ijau.12257

Alfisah, E., Kurniaty, & Zulfikar, R. (2022). How Capital Structure And Financial Performance Impact On Food And Beverage Company Value? International Journal of Science, Technology & Management, 3(1), 104–112. https://doi.org/10.46729/ijstm.v3i1.453

Alghifari, E. S., Hermawan, A., Gunardi, A., Rahayu, A., & Wibowo, L. A. (2022). Corporate Financial Strategy in an Emerging Market: Evidence from Indonesia. Journal of Risk and Financial Management, 15(8). https://doi.org/10.3390/jrfm15080362

Altawalbeh, M. A. (2025). Determinants Factors of a Going Concern Audit Opinion: a Risk Governance and Regulation Implication. Risk Governance and Control: Financial Markets and Institutions, 15(1), 188–196. https://doi.org/10.22495/rgcv15i1sip4

Altman, E. I. (1974). Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. The Journal of Finance, 29(1), 589–609. https://doi.org/10.1111/j.1540-6261.1974.tb00057.x

Amponsah-Kwatiah, K., & Asiamah, M. (2021). Working capital management and profitability of listed manufacturing firms in Ghana. International Journal of Productivity and Performance Management, 70(7), 1751–1771. https://doi.org/10.1108/IJPPM-02-2020-0043

Andrews, P. W. S. (1991). An empirical model of capacity expansion and pricing in an oligopoly with barometric price leadership: A case study of the newsprint industry in North America. The Journal of Industrial Economics, 39(2), 255–276. https://doi.org/10.2307/1248046

Averio, T. (2021). The analysis of influencing factors on the going concern audit opinion – a study in manufacturing firms in Indonesia. Asian Journal of Accounting Research, 6(2), 152–164. https://doi.org/10.1108/AJAR-09-2020-0078

Bahtiar, A., Meidawati, N., Setyono, P., Putri, N. R., & Hamdani, R. (2021). Determinants of going concern audit opinion: An empirical study in Indonesia. Jurnal Akuntansi & Auditing Indonesia, 25(2), 183–193. https://doi.org/10.20885/jaai.vol25.iss2.art8

BPS. (2024). Ekonomi Indonesia tahun 2024 tumbuh 5,03 persen. https://www.bps.go.id

Bradbury, M., Fargher, N., Potter, B., & Taylor, S. (2022). Going Concern Uncertainty: What Do Firms Disclose? Australian Accounting Review, 32(3), 294–314. https://doi.org/10.1111/auar.12379

Brunelli, S., Carlino, C., Castellano, R., & Giosi, A. (2021). Going concern modifications and related disclosures in the Italian stock market: do regulatory improvements help investors in capturing financial distress? In Journal of Management and Governance (Vol. 25, Nomor 2). Springer US. https://doi.org/10.1007/s10997-020-09537-7

Budiatmaja, R. (2023). Relationship and Influence Four Components on Financial Distress in Non-Financial Sector Companies Listed on the IDX Period 2020-2022. International Journal of Business and Economics Research, 12(5), 162–167. https://doi.org/10.11648/j.ijber.20231205.11

Bui, H., & Krajcsák, Z. (2024). The impacts of corporate governance on firms’ performance: from theories and approaches to empirical findings. Journal of Financial Regulation and Compliance, 32(1), 18–46. https://doi.org/10.1108/JFRC-01-2023-0012

Candra, H., & Ramadhan, Y. (2022). Penentuan Audit Opini Kelangsungan Hidup Pada Perusahaan Sektor Transportasi Yang Terdaftar Pada Bursa Efek Indonesia. E-Jurnal Akuntansi, 32(6), 1550. https://doi.org/10.24843/eja.2022.v32.i06.p12

Cathcart, L., Dufour, A., Rossi, L., & Varotto, S. (2024). Corporate bankruptcy and banking deregulation: The effect of financial leverage. Journal of Banking and Finance, 166(May), 107219. https://doi.org/10.1016/j.jbankfin.2024.107219

Charitou, A., Clubb, C., & Andreou, A. (2001). The effect of earnings permanence, growth and firm size on the usefulness of cash flows and earnings in explaining security returns: Empirical evidence for the UK. Journal of Business Finance and Accounting, 28(5–6), 563–594. https://doi.org/10.1111/1468-5957.00385

Chiosea, D. B. R., & Hategan, C. D. (2024). Research Trends in Going Concern Assessment and Financial Distress in Last Two Decades: A Bibliometric Analysis. Risks, 12(12). https://doi.org/10.3390/risks12120184

Dainelli, F., Bet, G., & Fabrizi, E. (2024). The financial health of a company and the risk of its default: Back to the future. International Review of Financial Analysis, 95, 1–42. https://doi.org/10.1016/j.irfa.2024.103449

de Carvalho, P. V., Ferrão, J., Alves, J. S., & Sarmento, M. (2023). The informational value contained in the different types of auditor’s opinions: Evidence from Portugal. Cogent Economics and Finance, 11(1). https://doi.org/10.1080/23322039.2022.2162688

Dinda, D. (2024). The Influence of Profitability, Liquidity, Solvency and Company Growth on Going Audit Opinion. Financial and Accounting Indonesian Research, 4(1), 1–19. https://doi.org/10.36232/jurnalfairakuntansiunimuda.v4i1.6707

Durand, D. (1952). Costs of debt and equity funds for business: Trends and problems of measurement.

Elmashtawy, A., Che Haat, M. H., Ismail, S., & Almaqtari, F. A. (2024). The moderating effect of the interaction between joint audit and accounting conservatism on the association between corporate governance and corporate performance. Cogent Business and Management, 11(1). https://doi.org/10.1080/23311975.2023.2284803

Elsayed, N., & Hassan, M. K. (2024). Audit simulation and learning styles: Enhancing students’ experiential learning and performance at a MENA university. International Journal of Auditing, 632–651. https://doi.org/10.1111/ijau.12345

Evdokimov, E., & Yusoff, I. (2024). CEO succession and auditor going concern decisions: An analysis of outsider CEOs and generalist skills. Journal of Accounting and Public Policy, 43(December 2023), 107159. https://doi.org/10.1016/j.jaccpubpol.2023.107159

Felicia, W., & Lindrianasari. (2025). Determinants Influencing Companies Receiving Going Concern Opinions: Empirical Evidence From a Developing Market. Risk Governance and Control: Financial Markets and Institutions, 15, 163–173. https://doi.org/10.22495/rgcv15i1sip2

Fidiana, F., Yani, P., & Suryaningrum, D. H. (2023). Corporate going-concern report in early pandemic situation: Evidence from Indonesia. Heliyon, 9(4), e15138. https://doi.org/10.1016/j.heliyon.2023.e15138

Fisher, M. R., & Baumol, W. J. (1962). Business Behavior, Value and Growth. The Economic Journal, 72(287), 708–711. https://doi.org/10.2307/2228457

Fitriah Herdiati, M., Yusnaini, Y., & Wahyudi, T. (2023). The Effect of Independence, Role Conflict, and Internal-External Auditor Relationship on Audit Quality: Case at Universities in Indonesia. Journal of Economics, Finance and Management Studies, 06(07), 3197–3205. https://doi.org/10.47191/jefms/v6-i7-22

Fossung, M. F., Mukah, S. T., Berthelo, K. W., & Nsai, M. E. (2022). The Demand for External Audit Quality: The Contribution of Agency Theory in the Context of Cameroon. Accounting and Finance Research, 11(1), 13–23. https://doi.org/10.5430/afr.v11n1p13

Gabrielli, A., & Greco, G. (2023). Tax planning and financial default: role of corporate life cycle. Management Decision, 61(13), 321–355. https://doi.org/10.1108/MD-07-2022-0928

Grasella, V., & Yulazri. (2024). Pengaruh Ukuran Perusahaan, Leverage, Profitabilitas, dan Opini Audit Tahun Sebelumnya Terhadap Opini Audit Going Concern. Management & Accounting Expose, 7(1), 74–84. http://jurnal.usahid.ac.id/index.php/accounting

Grosu, M., Fîrțescu, B. N., Andreev, R., & Mihalciuc, C. C. (2025). Assessing the Quality and Transparency of Financial Audit Reporting in the Context of Gender Differences – Evidence from Companies Listed on the Regulated Market. Scientific Annals of Economics and Business, 72(1), 41–58. https://doi.org/10.47743/saeb-2025-0003

Hammond, P., & Opoku, M. O. (2023). The mediating effect of going concern and corporate reporting in the relationship between corporate governance and investor confidence in financial institutions. Heliyon, 9(10), e20447. https://doi.org/10.1016/j.heliyon.2023.e20447

Heller, D., Karapanagiotis, P., & Nilsen, Ø. A. (2025). Small and vulnerable during crises? Firm size and financing constraint dynamics. Small Business Economics. https://doi.org/10.1007/s11187-024-00996-y

Hermanto, H., & Dewinta, A. (2023). Pengaruh Ukuran Perusahaan, Efisiensi Perusahaan, Likuiditas, Kekuatan Pasar, Pertumbuhan Perusahaan Dan Leverage Terhadap Profitabilitas. Jurnal Ilmiah Manajemen, Ekonomi, & Akuntansi (MEA), 7(2), 846–871. https://doi.org/10.31955/mea.v7i2.3060

Hoai, T. T., & Nguyen, N. P. (2022). Internal Control Systems and Performance of Emerging Market Firms: The Moderating Roles of Leadership Consistency and Quality. SAGE Open, 12(3). https://doi.org/10.1177/21582440221123509

Ibrahim, I., & Falkenbach, H. (2023). International diversification and European firm value: the role of operating efficiency. Journal of European Real Estate Research, 16(3), 381–397. https://doi.org/10.1108/JERER-07-2023-0025

Ismail, T. H., Samy El-Deeb, M., & Abd El–Hafiezz, R. H. (2024). Ownership structure and financial reporting integrity: the moderating role of earnings quality in Egyptian practice. Journal of Humanities and Applied Social Sciences, 6(5), 471–495. https://doi.org/10.1108/jhass-06-2024-0076

Jamaani, F. (2023). The Vanishing Role of IFRS Application on the Performance of Saudi Arabian IPO Companies. International Journal of Financial Research, 14(1), 1. https://doi.org/10.5430/ijfr.v14n1p1

Jan, C. L. (2021). Using deep learning algorithms for CPAs’ going concern prediction. Information (Switzerland), 12(73), 1–22. https://doi.org/10.3390/info12020073

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. The Corporate Financiers, 3, 305–360. https://doi.org/10.1057/9781137341280.0038

Kemenperin. (2024). Kemenperin Jaring dan Kembangkan IKM Pangan Inovatif melalui Program Indonesia Food Innovation 2024. https://ikm.kemenperin.go.id/kemenperin-jaring-dan-kembangkan-ikm-pangan-inovatif-melalui-program-indonesia-food-innovation-2024

Khalilov, A. (2025). Informational and cushioning properties of conservative balance sheets: a study of crises resilience. In Review of Quantitative Finance and Accounting (Nomor 1). Springer US. https://doi.org/10.1007/s11156-025-01395-4

Kim, T. (2021). Does a manager respond to a going-concern audit opinion with an asymmetry in gain and loss? Sustainability (Switzerland), 13(8). https://doi.org/10.3390/su13084425

Krisna Arum, G. I., Hastuti, A. W., & Suprayitno, A. (2022). Effect of Financial Performance on Going Concern Audit Opinion. International Journal of Research in Social Science and Humanities, 03(08), 36–45. https://doi.org/10.47505/ijrss.2022.v3.8.6

Kuzmin, E., Rakhimova, G., & Nasirova, H. (2025). Assessing the spread and coverage of ESG practices in Russian companies. Frontiers in Sustainability. https://doi.org/10.3389/frsus.2025.1574190

Louwers, T. J. (1992). The Relation between Going -Concern Opinion and the Auditor’s Loss Function. Journal of Accounting Research, 36(3), 245–270.

Magri, C., & Marchini, P. L. (2024). Audit quality and debt restructuring: evidence from Italy. Managerial Auditing Journal, 39(1), 50–70. https://doi.org/10.1108/MAJ-01-2023-3794

Marcelin, V. F., & Gantino, R. (2022). Pengaruh Pengaruh Profitabilitas, Leverage dan Likuiditas Terhadap Kebijakan Dividen. Ekonomi, Keuangan, Investasi dan Syariah (EKUITAS), 4(1), 297–306. https://doi.org/10.47065/ekuitas.v4i1.2065

Mariano, E. (2024). PENGARUH UKURAN PERUSAHAAN, PROFITABILITAS, AUDIT LAG DAN OPINI AUDIT TAHUN SEBELUMNYA TERHADAP PEMBERIAN OPINI AUDIT GOING CONCERN. Jurnal Ekonomi Pembangunan STIE Muhammadiyah Palopo, 10(2), 339–351.

Martínez, F. G., Jiménez, J. D., & Matas, R. Q. S. de las. (2024). Reevaluating Bank Price-to-Book Ratios: An In-Depth Analysis of Equity Components across Economic Cycles. Journal of Risk and Financial Management, 17(8). https://doi.org/10.3390/jrfm17080363

Matonti, G., Iuliano, G., & Vlismas, O. (2024). Organization capital and modified audit opinion. Measuring Business Excellence, 28(2), 255–274. https://doi.org/10.1108/MBE-09-2023-0123

Nikmah, A., & Munandar, M. (2021). Determinan Opini Audit Going Concern Perusahaan Manufaktur Di Indonesia. Jurnal Liabilitas, 6(1), 35–52. https://doi.org/10.54964/liabilitas.v6i1.70

Norkio, A. (2024). Intangible capital and financial leverage in SMEs. Managerial Finance, 50(2), 434–450. https://doi.org/10.1108/MF-10-2022-0488

Nugroho, M. (2021). Corporate governance and firm performance. Accounting, 7(1), 13–22. https://doi.org/10.5267/j.ac.2020.10.019

Nurhidayah, N., Sudarma, M., Djamhuri, A., & Atmini, S. (2024). Audit opinion research: overview and research agenda. Cogent Business and Management, 11(1). https://doi.org/10.1080/23311975.2023.2301134

Osei, A., Osei Agyemang, A., Amoah, J., & Sulemana, I. (2023). Empirical study on the impact of working capital management on going concern of manufacturing firms in Ghana. Cogent Business and Management, 10(2). https://doi.org/10.1080/23311975.2023.2218177

Park, H. J., & Choi, J. (2023). Financial Distress and Audit Report Lags: An Empirical Study in Korea. Gadjah Mada International Journal of Business, 25(3), 301–326. https://doi.org/10.22146/gamaijb.72251

Pekár, J., Brezina, I., & Reiff, M. (2025). Green investments: Portfolio selection based on risk measure and ESG indicators. Impact of environmental indicators on portfolio selection. Green Finance, 7(2), 223–246. https://doi.org/10.3934/GF.2025009

Pojanavatee, S., & Kingshott, R. (2025). Liquidity and leverage on the financial performance of savings and credit cooperatives in the emerging Thailand market. Journal of Indian Business Research. https://doi.org/10.1108/JIBR-10-2024-0221

Ponomareva, L. (2021). Investigation of the Influence of Internal Control System Factors on the Financial Stability of Companies (Review). Journal of Corporate Finance Research, 15(2), 66–76. https://doi.org/10.17323/j.jcfr.2073-0438.15.2.2021.66-76

Pristha, A. A., & Indrati, M. (2024). Faktor Yang Memengaruhi Pertumbuhan Laba pada Sektor Industri Subsektor Food and Beverage di Indonesia. J-MAS (Jurnal Manajemen dan Sains), 9(2), 1351. https://doi.org/10.33087/jmas.v9i2.1957

Puspaningsih, A. (2023). The Influence of Leverage, Financial Distress, Management Strategy and Company Growth on Going Concern Audit Opinions. Review of Integrative Business and Economics Research, 13, 501.

Rahman, M., Sa, C. L., & Masud, M. A. K. (2021). Predicting Firms’ Financial Distress: An Empirical Analysis Using the F-Score Model. Journal of Risk and Financial Management, 14(5). https://doi.org/10.3390/jrfm14050199

Rangkuti, I., & Sahira, A. (2024). The Influence of Financial Distress , Debt Default , and Company Growth on Going Concern Audit Opinion In Manufacturing Companies In The Textile and Garment. International Conference in Artificial Intelligence, 1(1).

Reihlen, M., Schlapfner, J. F., Seeger, M., & Trittin-Ulbrich, H. (2022). Strategic Venturing as Legitimacy Creation: The Case of Sustainability. Journal of Management Studies, 59(2), 417–459. https://doi.org/10.1111/joms.12745

Retnosari, D., & Apriwenni, P. (2021). Opini Audit Going Concern: Faktor-Faktor Yang Memengaruhi. Jurnal Akuntansi, 10(1), 28–39. https://doi.org/10.46806/ja.v10i1.797

Rigoli, F. (2025). Modernization and Ideological Polarization on a Global Scale. Cross-Cultural Research, 0(October 2024), 1–44. https://doi.org/10.1177/10693971251327738

Roidah, L. S., & Subekti, I. (2024). Opini audit going concern: Faktor-faktor yang memengaruhi. JURNAL AKUNTANSI, 4(02), 392–401.

Saleh, S., Diab, A., & Abouelela, O. (2025). Firm Complexity and the Accuracy of Auditors’ Going Concern Opinions in Emerging Markets: Does Auditor Work Stress Matter? Journal of Risk and Financial Management, 18(3). https://doi.org/10.3390/jrfm18030108

Samagaio, A., & Felício, T. (2023). The determinants of internal audit quality. European Journal of Management and Business Economics, 32(4), 417–435. https://doi.org/10.1108/EJMBE-06-2022-0193

Sarpong, D. J., Boamah, N. A., & Akotey, J. O. (2025). Integration of the African banking sector. Cogent Economics & Finance, 13(1). https://doi.org/10.1080/23322039.2025.2494124

satu data kemendag. (2025). Perkembangan Ekspor Non Migas (Komoditi). https://satudata.kemendag.go.id/

Savano, B. O., & Handayani, S. (2022). Apakah Profitabilitas, Ukuran Perusahaan, dan Leverage Berpengaruh Terhadap Nilai Perusahaan. Jurnal Akuntansi dan Manajemen Esa Unggul (JAME), 10(1), 53–63.

Seretidou, D., Billios, D., & Stavropoulos, A. (2023). Integrative Analysis of Traditional and Cash Flow Financial Ratios: Insights from a Systematic Comparative Review. https://doi.org/https://doi.org/10.3390/risks13040062

Serumaga-Zake, J. M., & van der Poll, J. A. (2021). Addressing the impact of fourth industrial revolution on south african manufacturing small and medium enterprises (SMEs). Sustainability (Switzerland), 13(21). https://doi.org/10.3390/su132111703

Setyarini, K. M., Riyadi, S., & Said, S. (2023). Pengaruh Struktur Modal Terhadap Nilai Perusahaan Dengan Ukuran Perusahaan Sebagai Variabel Moderasi. Akuntansiku, 2(3), 139–145. https://doi.org/10.54957/akuntansiku.v2i3.528

Shakri, I. H., Yong, J., & Xiang, E. (2025). Does capital structure mediate the relationship between corporate governance compliance and firm performance? Empirical evidence from Pakistan. Journal of Asia Business Studies, 19(2), 408–428. https://doi.org/10.1108/JABS-08-2023-0315

Simões, M. de F., & Carvalho, C. (2024). Determinants of Qualified Audit Opinion: Empirical Study of Portuguese Private Sector Hospitals. Journal of Risk and Financial Management, 17(12), 1–20. https://doi.org/10.3390/jrfm17120571

Syofyan, E., & Vianti, K. O. (2021). Going concern audit opinion: The role of audit delay, opinion shopping, financial distress, leverage and size of company. Jurnal Akuntansi, 11(3), 235–246. https://doi.org/10.33369/j.akuntansi.11.3.235-246

Tang, D., Wu, J., & Chen, Z. (2022). Does the social security fund help non-financial enterprises to transform from the virtual to the real? China Journal of Accounting Research, 15(2), 100238. https://doi.org/10.1016/j.cjar.2022.100238

Thai, T. H. A., & Hoang, M. T. (2024). Does ownership matter in corporate cash holdings? Evidence from an emerging market. Journal of Economics and Development, 26(2), 123–138. https://doi.org/10.1108/JED-09-2023-0168

Tharavanij, P. (2021). Optimal Book-Value Debt Ratio. SAGE Open, 11(1). https://doi.org/10.1177/2158244020985788

Usman Khizar, H. M., Iqbal, M. J., Khalid, J., & Adomako, S. (2022). Addressing the conceptualization and measurement challenges of sustainability orientation: A systematic review and research agenda. Journal of Business Research, 142, 718–743. https://doi.org/10.1016/j.jbusres.2022.01.029

Yulisa, & W. (2023). Pengaruh Struktur Modal, Profitabilitas dan Ukuran Perusahaan Terhadap Nilai Perusahaan Pada Perusahaan Manufaktur Sektor Makanan dan Minuman Yang terdaftar di Bursa Efek Indonesia Tahun 2018-2021. Jurnal Publikasi Ekonomi dan Akuntansi, 3(1), 52–61. https://doi.org/10.51903/jupea.v3i1.580

Zdolšek, D., Jagrič, T., & Kolar, I. (2022). Auditor’s going-concern opinion prediction: the case of Slovenia. Economic Research Ekonomska Istrazivanja, 35(1), 106–121. https://doi.org/10.1080/1331677X.2021.1888766

Zheng, X., Zhang, L., Jia, C., & Yue, H. (2025). Research on Real-Time Processing and Risk Management Methods of Enterprise Financial Big Data Based on Distributed Computing Framework. Journal of Combinatorial Mathematics and Combinatorial Computing, November 2024, 3295–3317. https://doi.org/10.61091/jcmcc127b-184