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All Journal Indonesia Auditing Research Journal
Fenri Mayer
Universitas Airlangga, Indonesia
Computer Science & IT Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Languange, Linguistic, Communication & Media

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The effect of CEO overconfidence, audit committee expertise, and internal control weakness on financial statement restatement with audit quality as a moderating variable Fenri Mayer; Novrys Suhardianto
Indonesia Auditing Research Journal Vol. 15 No. 4 (2026): Auditing, Finance, IT Plan, IT Governance, Risk
Publisher : Institute of Accounting Research and Novation (IARN)

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.35335/arj.v15i4.813

Abstract

This study examines the relationships of CEO overconfidence, audit committee expertise, and disclosed internal control weakness with financial statement restatement, including the proposed moderating role of audit quality. Using annual-report data for 53 Consumer Non-Cyclicals firms listed on the Indonesia Stock Exchange over 2021–2025 (265 firm-year observations), the study applies binary logistic regression. The capital-expenditure-to-operating-cash-flow proxy for CEO overconfidence is positively associated with restatement in the reported main-effects model (B = 1.078; odds ratio = 2.938; p = 0.002). Audit committee expertise and internal control weakness do not show statistically significant Wald results, although extreme coefficient estimates suggest caution in interpreting these findings. Neither estimable audit-quality interaction is statistically significant in the reported output, while the interaction involving internal control weakness cannot be estimated, leaving its moderation hypothesis unresolved. The findings highlight the potential relevance of executive financial-reporting judgments and support closer scrutiny of optimistic assumptions and investment decisions as a governance consideration. However, the data do not establish that these actions, or the Big Four audit-quality proxy, causally prevent restatements.
Co-Authors Novrys Suhardianto