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The Evolution in the Value Relevance of Ac-counting Measures in Indonesia

The Evolution in the Value Relevance of Ac-counting Measures in Indonesia

This paper utilizes the model for share price, which is derived from the valuation model of residual income, to rigorously assess the evolution of the value relevance of accounting measures in Indonesia. As an emerging country, Indonesia’s capital markets have had their equity valuations changed substantially. This research uses two different approaches, which are cross-sectional and panel regressions. The statistical results indicate a strong linear association between share prices and fundamental accounting measures. Cross-sectional yearly price regressions provide strong evidence of non-linear changes to the value relevance of the accounting measures over time. Moreover, using panel data analysis, the results of unconditional comparisons reveal that the increased value-relevance of the financial statements are offset by a reduction in the value relevance of earnings per share during the IFRS regime. This could potentially contribute to explain the decrease in the value relevance of accounting numbers during the switchover to IFRS in Indonesia. This study infers that IFRS did not provide robust and recent evidence of its accounting relevance in emerging market countries. Therefore, the usefulness of adopting IFRS needs to be reviewed. It also recommends that the adoption of IFRS should consider common business practices in Indonesia, since this adoption may empower investors’ decision making.
Keywords: value relevance; accounting measures; share price model; IFRS


Detail Information

Bagian Informasi
Pernyataan Tanggungjawab -
Pengarang Eko suardi - Personal Name
Edisi Publish
No. Panggil 808.21
Subyek Eko suardi
Klasifikasi 808
Judul Seri
GMD Text
Bahasa Indonesia
Penerbit Gadjah Mada International Journal of Business
Tahun Terbit 2020
Tempat Terbit Indonesia
Deskripsi Fisik -
Info Detil Spesifik Gadjah Mada International Journal of Business,

  Tags :
Eko suardi


. (2020).The Evolution in the Value Relevance of Ac-counting Measures in Indonesia.(Electronic Thesis or Dissertation). Retrieved from https://localhost/etd


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