PENGARUH LEVERAGE, INVESTMENT OPPORTUNITY SET (IOS) DAN PROFITABILITAS TERHADAP KUALITAS LABA

Abstract

This research aimed to examine the effect of leverage, Investment Opportunity Set (IOS) and profitability on profit quality. While, leverage was measured by Debt to Equity Ratio, Investment Opportunity Set (IOS) was measured by market value of book to asset value and profitability was measured by Return On Asset. Meanwhile, profit quality was measured by discretionary accrual. The research was quantitative. Moreover, the data collection technique used purposive sampling. Furthermore, the population was 20 LQ-45 companies which were listed on Indonesia Stock Exchange during 2015-2019. Additionally, the data analysis technique used multiple linear regression. Based on the research result, it concluded as follows: (1) Leverage did not affect profit quality, as companies had optimal debt which could be avoid from financial risks, (2) Investment Opportunity Set (IOS) had positive effect on profit quality. It happened since companies which were developing made investors interested and motivated the companies to do profit management, (3) Profitability had negative effect on profit quality because companies’ profitability was lower. As consequence, the companies determined higher management profit.
Keywords: leverage, investment opportunity set, profitability, profit quality