Abstract
The adoption of the International Financial Reporting Standard (IFRS) is one of the most significant changes in the history of accounting to resolve shareholders’ information asymmetry in valuing companies in the capital market. Whether the value of accounting information is relevant to market participants is the objective of this study. Using the financial statements and the share prices for 23 banks listed in the Indonesian capital market (IDX) for the 2007–2012 period, this study analysed whether the accounting information (the book value, the net income and the operating cash flow) influences share prices. Moreover, this study analysed how much the adoption of the IFRS effectively increases the quality of the accounting information and its relevance to the share prices of the banking industry in the IDX. The result shows that the adoption of the IFRS increased the quality of the accounting information in valuing the companies. The book value information became more relevant to the share prices; moreover, it increased the most for net income and operating cash flow in the relevance of valuing the share price. The book value did not significantly determine the share price before the adoption of the IFRS. The net income and the operating cash flow decreased the information relevance to the share price and did not significantly influence the share price.
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Ramli, I. (2018). The Relevant Value of Accounting Information on the Adoption of the IFRS in the Capital Market: Evidence in the Indonesian Banking Industry. In: Said, R., Mohd Sidek, N., Azhar, Z., Anuar Kamarudin, K. (eds) State-of-the-Art Theories and Empirical Evidence. Springer, Singapore. https://doi.org/10.1007/978-981-10-6926-0_7
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DOI: https://doi.org/10.1007/978-981-10-6926-0_7
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