Profitability as a Mediator of Financial Statement Quality, Operating Cash Flow, and Company Size on Investment Efficiency

This study aims to examine the effect of financial statement quality, operating cash flow, and firm size on investment efficiency with profitability as a mediating variable in infrastructure companies listed on the Indonesia Stock Exchange during the period 2022 to 2024. Using a quantitative approach with path analysis and secondary data obtained from the financial reports of 17 selected companies through purposive sampling, this research analyzes the relationships among financial statement quality, operating cash flow, firm size, profitability, and, investment efficiency using LISREL 10.20. The results indicate that financial statement quality and operating cash flow do not have a significant effect on profitability, while firm size has a significant effect on profitability. Furthermore, financial statement quality, operating cash flow, and firm size do not have a direct effect on investment efficiency. Moreover, profitability is found to have a significant effect on investment efficiency. The mediation analysis shows that profitability does not mediate the effect of financial statement quality and operating cash flow on investment efficiency. However, profitability fully mediated the relationship between firm size and investment efficiency. The findings suggest that infrastructure companies need to focus on controlling operating and maintenance costs, as well as improving capital expenditure evaluation, in order to enhance investment efficiency.