Factors Affecting Investment Opportunity Set: A Study of Company Advantages and Limitations

Abstract

This study aims to prove the influence of Company advantages - company profitability and size, and company limitations - systematic risk and leverage, on the Investment Opportunity Set (IOS) in automotive companies listed on the Indonesia Stock Exchange during the period 2013 to 2017. There are 5 automotive companies that used as samples based on purposive sampling technique. The results of the study prove that the company's advantages have an effect on IOS, while the company's limitations have no effect on IOS. These results prove that the company must be able to maintain its advantages so that it can have greater growth opportunities. On the other hand, with the lack of evidence of company limitations as a factor affecting IOS, it does not mean that companies are not careful in making financial policies.