The Effect of Convergence with IFRS on Earnings Quality under Indonesian GAAP

Maria Stefani Osesoga and Jinn-Yang Uang

This study examines the effect of convergence with IFRS in Indonesia on the quality of earnings reporting. Using manufacturing companies listed in the Jakarta Stock Exchange in the years from 2009 to 2014, we find that earnings reported under the IFRS convergence period has a higher earnings response coefficient than earnings reported under the period of previous Indonesian GAAP. This finding lends support to the contention that IFRS convergence can increase investors’ belief in earnings quality. Taken together, this study provides evidence indicating that converging national accounting standards with IFRS in emerging capital markets may improve accounting quality.

DOI : https://doi.org/10.21102/graf.2016.09.72.01