The Effect of Convergence to International Financial Accounting Standards on Information Asymmetry–Evidence from Indonesian Companies Listed in the IDX from 2015–2019

DOI

10.2991/978-94-6463-008-4_8How to use a DOI?

Keywords

IFRS; information asymmetry; cost of capital; Indonesia Stock Exchange

Abstract

Since 1994, Indonesian financial accounting standards has referred to as International Accounting Standards/IAS (or International Financial Reporting Standards/IFRS started in 2001). Then, as a G20 member commitment, Indonesia took a more major step by developing standards that have been convergence to IFRS since 2009. A special breakthrough was done in 2015 as the gap between the IFRS, and Indonesian Financial Accounting Standards is only one year. Higher quality of accounting standards and financial reporting information is expected to decrease the information asymmetry in the capital market. This study aims to examine the effect of IFRS convergence on changes in information asymmetry. This study's sample consisted of 725 companies listed on the Indonesia Stock Exchange between 2015 and 2019 across industries. The cost of capital was used as a proxy for information asymmetry. This study shows that IFRS convergence has no significant effect on changes in information asymmetry. Macro control variables, i.e., inflation rate and market rate of return, also have no significant effect on changes in information asymmetry. However, the firm-specific control variables, i.e., firm size, leverage, and ROA, have a significant positive effect on information asymmetry, while beta has a significant negative effect. It argues that Indonesian investors could not make a difference in the quality of financial reporting.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Evilia Lesmanaputri
AU  - Yie Ke Feliana
AU  - Stefanus Budy Widjaja Subali
PY  - 2022
DA  - 2022/12/05
TI  - The Effect of Convergence to International Financial Accounting Standards on Information Asymmetry–Evidence from Indonesian Companies Listed in the IDX from 2015–2019
BT  - Proceedings of the 19th International Symposium on Management (INSYMA 2022)
PB  - Atlantis Press
SP  - 55
EP  - 62
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-008-4_8
DO  - 10.2991/978-94-6463-008-4_8
ID  - Lesmanaputri2022
ER  -