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Institutional Possession, Supervisory Board Size, External Auditor Quality, and Profit Quality

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  • Erna, Erna
  • Murwaningsari, Etty
  • Murtanto, Murtanto

Abstract

This study aims to reveal the determinants of profit quality based on governance factors. Specifically, the proposed factors are institutional possession (IP), supervisory board size (SBS), and an external reputable auditor. Besides, this study intends to examine the IP to moderate the relationship between SBS and profit quality. By employing 12 agricultural companies in the Indonesian capital market for ten years, from 2013 to 2022, this study obtains 120 observations and analyzes the data by regression model with polling data. After that, this study demonstrates that IP, the supervisory board size, and reputable external auditor quality positively affect profit quality. The negative interaction effect between IP and supervisory board size (IP*SBS) on profit quality is available: The smaller the SBS, the higher the profit quality, and this tendency happens when institutional possession decreases. In other words, the IP and SBS have substitution roles to crate profit quality.

Suggested Citation

  • Erna, Erna & Murwaningsari, Etty & Murtanto, Murtanto, 2024. "Institutional Possession, Supervisory Board Size, External Auditor Quality, and Profit Quality," OSF Preprints vxaud, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:vxaud
    DOI: 10.31219/osf.io/vxaud
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    References listed on IDEAS

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    2. Justin G. Davis & Miguel García-Cestona, 2023. "Institutional ownership, earnings management and earnings surprises: evidence from 39 years of U.S. data," Journal of Economics, Finance and Administrative Science, Emerald Group Publishing Limited, vol. 28(56), pages 218-236, November.
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