The Effect of IFRS Implementation on Earnings Quality in Indonesia

概要

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The purpose of this paper is to examine the impact of IFRS adoption on earnings quality of Indonesian companies in the convergence process. The examination is focused on the persistence and accrual quality model. High-quality financial reports provide investors with the information and confidence necessary to invest in the global capital markets. A high-quality set of accounting standards enables investors to receive suitable information while considering the reasonable costs of implementing those standards. The contribution of this paper is to give some implications for the accounting standard setters. Therefore, we investigate the effect of IFRS implementation on earnings quality with Indonesian sample use accounting-based measures: persistence, and accrual quality. We first consider the accounting standard's incremental effect on persistence (the interaction of prior period's earnings and the accounting standard variable). Second, we examine the changes in accrual quality. There are some implications shown by the results. Indonesian cases by persistence and accrual quality models indicate each of significant results: (1) the estimated coefficient for the incremental persistence for each of the twelve accounting standards and (2) eight of the estimated coefficients for the accounting standard effect; five of which are positive.