The Impact of Convergence with International Finanancial Reporting Standards (IFRS) on Accounting Quality in Indonesia

Abstract

The purpose of this study was to examine the impact of the implementation of accounting standards converge with International Financial Reporting Standards (IFRS) on accounting quality in Indonesia in the financial sector companies listed on the Indonesia Stock Exchange in 2008-2012. Accounting quality operationalized with earnings management, timely loss recognition, and value relevance. Samples were taken by using purposive sampling method, and obtained 62 companies. The data in this study were analyzed using multiple linear regression to measure earnings smoothing and value relevance?? and for managing earnings towards a target and timely loss recognition by using logistic regression. The results of this study showed that of the four metrics earnings management studied, only one metrics which gives significant results, the correlation accruals with cash flows, while the other metrics earnings management does not give significant results. Variable timely loss recognition also did not provide significant results. Variable value relevance gives significant results. When viewed between earnings per share or book value per share, the earnings per share has greater value relevance in explaining stock prices.  

Keywords: IFRS, accounting quality, earnings management, timely loss recognition, value relevance.