Effects of Firm Size, Liquidity, Leverage, and Investment Opportunity Set on Earnings Quality

Prety Syahwa Nabilla; Miswaty; Ika Makherta Sutadji

doi:10.63922/ijebir.v5i05.5777

Prety Syahwa Nabilla Accounting Study Program, Faculty of Economics and Business, Universitas Balikpapan, Balikpapan, East Kalimantan, Indonesia
Miswaty Accounting Study Program, Faculty of Economics and Business, Universitas Balikpapan, Balikpapan, East Kalimantan, Indonesia
Ika Makherta Sutadji Accounting Study Program, Faculty of Economics and Business, Universitas Balikpapan, Balikpapan, East Kalimantan, Indonesia

DOI: https://doi.org/10.63922/ijebir.v5i05.5777

Keywords: Earnings Quality, Firm Size, Current Ratio, Debt-to-Equity Ratio, Investment Opportunity Set

Abstract

This study investigates the influence of firm size, current ratio, debt-to-equity ratio, and investment opportunity set on the earnings quality of textile and garment manufacturing companies listed on the Indonesia Stock Exchange during the 2021–2025 period. The research is motivated by the unstable performance of Indonesia's textile and garment industry, along with inconsistent findings reported in previous studies regarding the determinants of earnings quality. A quantitative research design was employed using secondary data obtained from audited annual financial statements. The sample consisted of 14 companies selected through purposive sampling, resulting in 70 firm-year observations. The hypotheses were tested using multiple linear regression analysis with IBM SPSS. The empirical findings reveal that firm size, current ratio, and investment opportunity set do not significantly affect earnings quality, whereas the debt-to-equity ratio has a positive and significant effect. These findings provide updated empirical evidence regarding the determinants of earnings quality in Indonesia's textile and garment manufacturing sector and contribute to the development of financial accounting literature, particularly in the context of emerging markets.

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