Joseph Herbert, Puji Harto
This study aims to examine the effect of financial reporting quality and family ownership on investment efficiency, moderated by audit quality. Size, leverage, firm age, and tangibility serve as control variables. Population used in this study is manufacture firms listed on Indonesia Stock Exchange (IDX) in the period of 2015-2019 and sample is selected with purposive sampling method, resulting in 217 firms. Statistical analysis in this study is using multiple regression model. The results show that family ownership has significant effect on investment efficiency, while audit quality significantly moderated the relationship of family ownership on investment efficiency. Financial reporting quality do not have significant effect on investment efficiency and audit quality do not moderate significantly on the relationship of financial reporting quality on investment efficiency. This study is draw on both agency and behavioral agency theories. It contributes to the literature in the following ways. Firstly, the authors examine the effect of financial reporting quality on investment efficiency. Secondly, the authors examine the effect of family ownership on investment efficiency. Third of all, the authors examine the moderating effect of audit quality on the relationship between financial reporting quality and family ownership on investment efficiency.