Financial Risk and Audit Judgment as a Driver of Going Concern Opinions in Transportation Firms

Abstract

Research Aim:

Despite extensive research on going concern opinions, limited evidence compares the relative influence of financial risk and audit-related factors within capital-intensive industries in emerging markets. This study aims to examine how financial risk and audit judgment factors drive the issuance of going concern audit opinions in transportation firms listed on the Indonesia Stock Exchange during 2021–2024.

Design/Methodology/Approach:
A quantitative research design was employed using logistic regression analysis on 100 firm-year observations derived from 25 companies selected through purposive sampling. The data were obtained from audited annual financial statements and independent auditors’ reports published by the Indonesia Stock Exchange.

Findings:
The results show that financial risk indicators—particularly leverage and financial distress—significantly increase the likelihood of receiving a going concern audit opinion. In contrast, profitability, audit tenure, and firm size do not exhibit significant effects. These findings indicate that auditors place greater emphasis on solvency-related risk exposure rather than profitability measures or engagement characteristics when forming going concern judgments.

Originality/Value:
This study provides sector-specific evidence from transportation firms, a capital-intensive industry characterized by high financial vulnerability. The findings highlight the dominant role of financial pressure indicators in shaping auditors’ professional judgments.

Practical Implications:

The results offer insights for companies, auditors, investors, and regulators in identifying early warning signals of financial instability and strengthening transparency in going concern assessments.

Research Limitations:

The study is limited to one industry sector and a four-year observation period, which may restrict broader generalization