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All Journal Enrichment: Journal of Multidisciplinary Research and Development
Ayu Febrianggi
Universitas Muhammadiyah Makassar, Indonesia
Humanities Economics, Econometrics & Finance Engineering Health Professions Social Sciences

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The Effect of Financial Statement Quality on Investment Efficiency with Litigation Risk as a Moderating Variable Ayu Febrianggi; Linda Arisanty Razak; Wa Ode Rayyani
Enrichment: Journal of Multidisciplinary Research and Development Vol. 1 No. 9 (2023): Enrichment: Journal of Multidisciplinary Research and Development
Publisher : International Journal Labs

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.55324/enrichment.v1i9.74

Abstract

Investment efficiency remains important for manufacturing companies because inefficient capital allocation may reduce the benefits of investment and weaken the use of corporate resources. This study examines the effect of financial statement quality on investment efficiency and the moderating role of litigation risk in manufacturing companies listed on the Indonesia Stock Exchange during 2018-2022. The study uses a quantitative explanatory research approach. The population comprises 193 manufacturing companies, and purposive sampling produced a sample of 39 companies observed for five years, resulting in 195 firm-year observations. Data were collected through documentation of company annual reports and market data and were processed using IBM SPSS Statistics. The analysis uses regression and an interaction term to evaluate the moderating role of litigation risk. The results show that financial statement quality has no significant effect on investment efficiency (B = 0.165; t = 0.986; p = 0.325; R² = 0.005). In the moderated model, the interaction between financial statement quality and litigation risk is positive and significant (B = 0.499; t = 2.486; p = 0.014), while the model explains 5.9% of the variance in investment efficiency (R² = 0.059). These findings indicate that litigation risk moderates the relationship between financial statement quality and investment efficiency, although the explanatory power of the model remains limited. The results imply that financial reporting quality should be considered together with external legal pressures when evaluating investment efficiency
Co-Authors Linda Arisanty Razak Wa Ode Rayyani