Trading volume reactions and the adoption of international accounting standard (IAS 1): Presentation of financial statements in Indonesia

Beatrise Sihite, Aria Farah Mita

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

Indonesia is in the process of IFRS convergence and plans to adopt the IFRS fully. Therefore, the impact of IFRS adoption on local standards needs to be investigated. This study focuses on the impact of adoption of IAS No.1: Presentation of Financial Statements into Indonesian local standards (PSAK No. 1). This study aims to examine the impact of the adoption on the trading volume around the annual earnings announcement in the first year that the standard becomes enacted in 2011. Consistent with IAS No. 1, Indonesian local standard, namely PSAK No. 1 that requires companies to present total comprehensive income as bottom-line of the financial performance report, which summaries all changes in owners' equity except changes arising from transactions with owners. The samples are Indonesian listed companies which included in the LQ45 index. The findings indicate that total comprehensive income presented as bottom-line in the financial performance report as required by IAS 1 has higher information content than net income. So It is implied that the policy of adopting the IAS No. 1 about Presentation of Financial Statements supports the proponents of the IFRS convergence program in Indonesia as it finds that the presentation of earnings information according to IAS No. 1 has higher information content.

Original languageEnglish
Title of host publicationProceedings of the 32nd International Business Information Management Association Conference, IBIMA 2018 - Vision 2020
Subtitle of host publicationSustainable Economic Development and Application of Innovation Management from Regional expansion to Global Growth
EditorsKhalid S. Soliman
PublisherInternational Business Information Management Association, IBIMA
Pages5154-5159
Number of pages6
ISBN (Electronic)9780999855119
Publication statusPublished - 1 Jan 2019
Event32nd International Business Information Management Association Conference, IBIMA 2018 - Seville, Spain
Duration: 15 Nov 201816 Nov 2018

Publication series

NameProceedings of the 32nd International Business Information Management Association Conference, IBIMA 2018 - Vision 2020: Sustainable Economic Development and Application of Innovation Management from Regional expansion to Global Growth

Conference

Conference32nd International Business Information Management Association Conference, IBIMA 2018
CountrySpain
CitySeville
Period15/11/1816/11/18

Keywords

  • Comprehensive income
  • International Accounting Standard
  • Net income
  • Trading volume

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