Main Article Content
Abstract
This study investigates the determinants of financial reporting quality by examining the effects of profitability, leverage, litigation risk, and firm size, as well as the moderating roles of managerial and institutional ownership. The study aims to assess whether ownership structure strengthens or weakens the relationship between firm characteristics and financial reporting quality among manufacturing companies in an emerging market. The research sample comprises 102 manufacturing firms listed on the Indonesia Stock Exchange during the 2020–2024 period, resulting in 510 firm-year observations. Logistic regression analysis was employed to test two models. The results indicate that profitability has a significant positive effect on financial reporting quality, while litigation risk has a significant negative impact. Leverage, managerial ownership, and institutional ownership individually show no significant direct impact. However, the moderating model reveals that managerial ownership significantly moderates the relationship between leverage and financial reporting quality, suggesting that higher managerial ownership reduces the negative influence of leverage on reporting quality. Institutional ownership, however, does not significantly moderate any of the examined relationships. The findings highlight the role of ownership structure, particularly managerial ownership, as a governance mechanism that can mitigate the adverse effects of financial leverage on reporting practices.