This study aims to determine the effects of financial reporting quality and government intervention on firms’ investment efficiency in Indonesia. This study adopts 876 firm observations that are listed on the Indonesia Stock Exchange between 2012 and 2014. Results of the assessment reveal that financial reporting quality positively affects underinvestment and overall investment efficiency. Government intervention with a proxy of government ownership percentage does not significantly affect the investment efficiency, however, government intervention with a proxy of political connection significantly and negatively affects the investment efficiency instead. This presumably driven by the high cost of capital due to political connection and pressure from politicians who refused to be blamed for the failure of the firm. An indication is also found that the government intervention measured through political connections negatively moderates the effects of financial reporting quality on the investment efficiency.