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The Effect of IFRS Convergence on Earnings Quality: Empirical Evidence from Indonesia

Author

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  • Paulina Sutrisno

    (Trisakti School of Management Author-2-Name: Indra Arifin Djashan Author-2-Workplace-Name: Trisakti School of Management)

Abstract

Objective �The purpose of this research is to examine the impact of the International Financial Reporting Standard (IFRS) convergence in Indonesia on earnings quality. Methodology/Technique � Earnings quality is measured on both accrual earnings management and real earnings management. Indonesia began convergence IFRS in 2012. IFRS is considered capable of improving comparability, transparency, and earnings information, which is expected to ultimately improve earnings quality. The sample in this research uses manufacturing firms listed on the Indonesian Stock Exchange that were suspected to avoid loss during the observation period. The data consist of 45 companies examined between 2008 and 2015. Results �This study uses statistical methods and multiple regression linear to analyse the data. The research results show that IFRS convergence in Indonesia has had a negative impact on accrual earnings management and no impact on real earnings management. Novelty �The evidence shows that IFRS convergence in Indonesia has the ability to improve earnings quality related to a decrease in accrual earnings management but not real earnings management.

Suggested Citation

  • Paulina Sutrisno, 2017. "The Effect of IFRS Convergence on Earnings Quality: Empirical Evidence from Indonesia," GATR Journals afr148, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:afr148
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    References listed on IDEAS

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    1. Mary E. Barth & Wayne R. Landsman & Mark H. Lang, 2008. "International Accounting Standards and Accounting Quality," Journal of Accounting Research, Wiley Blackwell, vol. 46(3), pages 467-498, June.
    2. Hans B. Christensen & Edward Lee & Martin Walker & Cheng Zeng, 2015. "Incentives or Standards: What Determines Accounting Quality Changes around IFRS Adoption?," European Accounting Review, Taylor & Francis Journals, vol. 24(1), pages 31-61, May.
    3. Ahmed, Kamran & Chalmers, Keryn & Khlif, Hichem, 2013. "A Meta-analysis of IFRS Adoption Effects," The International Journal of Accounting, Elsevier, vol. 48(2), pages 173-217.
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    Cited by:

    1. Diyah Pujiati & Supriyati & Riski Aprillia Nita, 2022. "Determinant of Earnings Quality: IFRS Convergence, Accounting Disclosure and Audit Committee in Indonesia," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 11(1), pages 177-189, January.

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    More about this item

    Keywords

    IFRS; Discretionary Accrual; Abnormal Cash Flow Operation; Abnormal Production; Abnormal Discretionary Expenditure.;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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