Corporate Going Concern in Pandemic Situation: Evidence from Indonesia

Abstract

Going-concern (GC) explanation in audit report adds value and ensures that the firm's sustainability is secured. However, the literature suffers from a strict focus on financial power, with less attention to consider the situational condition of a pandemic as well as less emphasis on dividend policy. Moreover, financial and non-financial factors can affect GC positively or negatively. This study sheds light on this relationship of listed infrastructure, utilities, and transportation firms in Indonesia as the most affected firm by Covid-19. Data were collected from published audited annual reports and extracted from 73 firms as the sample. Logistic regression was employed to test the hypotheses. The results show the importance of leverage, audit quality, prior opinion, and dividend policy in ensuring corporate GC. Conversely, audit committee and institutional holder as one of the corporate governance indicators does not relate to GC explanations. Beyond its contribution to the literature, this study offers valuable feedback for regulatory bodies to consider the enforcement of corporate governance implementation and assists investors in making better-informed decisions. Furthermore, due to a pandemic crisis, a postponed dividend payment has not caused the firm to accept a GC explanatory decision.

Keywords: Going-concern, dividend policy, corporate governance, audit quality, pandemic