THE EFFECT OF INVESTMENT OPPORTUNITY SET, OVERVALUED EQUITY, PROFIT MANAGEMENT ON PROFIT QUALITY WITH INSTITUTIONAL OWNERSHIP AS A MODERATION VARIABLE

Abstract

This study examines the influence of investment opportunity set, overvalued equity, and profit management on the quality of profits with institutional ownership as a moderation variable in non-cyclical consumer sector companies in the food and beverage subsector listed on the Indonesia Stock Exchange for the 2020–2023 period. Using quantitative and purposive sampling approaches, as many as 30 companies with 120 observational data were analyzed through narrowed regression (MRA) using SPSS 25.0 and classical assumption tests. The results show that investment opportunity set, overvalued equity, and profit management have a significant effect on the quality of profit. Institutional ownership moderates the influence of investment opportunity set and overvalued equity, but not on profit management. These findings confirm the importance of the role of institutional ownership in supervision to improve the quality of profits related to investment opportunities and market valuations, while control over profit management is still limited. This research enriches understanding of the factors and governance mechanisms that affect the quality of financial reporting in the Indonesian capital market.