The effect of financial reporting and debt maturity quality of investment efficiency with litigation risk as moderated variables

Yani Permatasari, Ana Vebri Rahmadini Nengtyas

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

The purpose of this study is to analyse whether the quality of financial reporting and debt maturity can improve the efficiency of corporate investment by using the moderating variable of litigation risk. This study uses observations from 428 companies listed on the Indonesia Stock Exchange during three periods from 2014 to 2016. The Ordinary Least Square Regression analysis method was used to examine whether financial reporting quality and debt maturity can improve the efficiency of corporate investment. This study found that companies that have higher financial reporting quality are positively and significantly related to the efficiency of corporate investment and low debt maturity is negatively and significantly related to investment efficiency. Research was conducted using litigation risk moderation variables, and results show that the relationship between financial reporting quality and investment efficiency is weakened by the presence of litigation risk while debt maturity does not moderate the debt maturity relationship to investment efficiency. This research has implications for investors as a consideration in assessing investment management carried out by company management. The results of this study show that companies that have higher financial reporting quality can improve investment efficiency.

Original languageEnglish
Pages (from-to)411-425
Number of pages15
JournalInternational Journal of Innovation, Creativity and Change
Volume10
Issue number12
Publication statusPublished - 2020

Keywords

  • Debt maturity
  • Financial reporting quality
  • Investment efficiency
  • Litigation risk

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