Abstract
This quantitative study aims to determine and analyze the effect of investment opportunity set (IOS) in mediating company advantage in the form of company size and profitability on funding policies in LQ45-indexed companies in 2019-2020. The population of this study is 54 companies. It involved 24 Samples selected using a purposive sampling technique. Data were collected from the documentation and data presentation using time series data. Data were analyzed using regression analysis, path analysis, and the Sobel test. The results showed that there is no effect of company size on funding policy and profitability has a negative effect on funding policy. Besides, IOS has a positive effect on funding policy and company size does not affect IOS. Profitability has a positive effect on IOS. IOS cannot mediate company size against funding policies. IOS can partially mediate profitability against funding policies. Companies use the opportunity to grow with the amount of debt to get more value with their investment. Companies positively respond to the extent of investment opportunities by turning their capital from internal and external companies for investment purposes.
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