The Impact of IFRS Convergence on Accounting Information Quality and Its Influence on Information Asymmetry in Indonesia Stock Exchange

Abstract

This research uses 388 number of observations taken from annual financial reporting of 97 manufacturing companies listed in Indonesia Stock Exchange. Indonesia Stock Exchange is classified as emerging capital market.  Data were tested using wilcoxon signed rank test, Spearman’s rank correlation test, and path analysis. Result  of  wilcoxon signed rank test showed that there is no difference of accounting information quality in before and after full convergence of IFRS period. Spearman’s rank  correlation test result also indicate that the negative correlation value of the period after the full convergence of IFRS is greater than the previous period. This indicates that the quality of accounting information before the full convergence is better  than the period thereafter. Both test results are in contrast to the original allegations. Results of path analysis shows that IFRS and accounting information quality significantly affect the asymmetry of information.  Correlation coefficient shows that the quality of accounting information have a stronger relationship with the asymmetry of information than IFRS. Calculation error value of the model equations path analysis showed that the direct effect of IFRS on information asymmetry is equal to 16.5%, indirect influence (through the quality of accounting information) is 10.9%, so the total is 27.4%. While direct influence of  accounting information quality on the information asymmetry is 49.8%.

Keywords: IFRS, Accounting Information Quality, Information Asymmetry