Credit Value-Relevance of Earnings, Other Comprehensive Income, and Comprehensive Income: A Study on IFRS Adoption Stage in Indonesia
DOI:
https://doi.org/10.18196/jai.1902101Keywords:
credit value-relevance, earnings, other comprehensive income, comprehensive incomeAbstract
This research aims to examine the credit value-relevance of net income, other comprehensive income (OCI) and comprehensive income. This research indirectly examines the impact of IFRS adoption on the usefulness of earnings and OCI information. The credit value-relevance measures the usefulness of accounting information from the creditor perspective, represented by the bond rating agency. In this research, accounting information is said to have credit value-relevance if accounting information affects bond rating. The sample of this research is 495 bond issuer companies listed in Indonesia Stock Exchange period 2011-2016. Hypothesis testing is done by the logit regression test. The results show that net income and comprehensive income have credit-value relevance, whereas OCI has no credit relevance. The results also find an increase in the credit-value relevance of comprehensive income from the beginning adoption of IFRS (2011) to the first implementation of IFRS adoption.References
Barth, M. E., Beaver, W. H., & Landsman, W. R. (2001). The relevance of the value relevance literature for financial accounting standard setting : Another View. Journal of Accounting and Economics, 31, 77–104. doi: 10.1016/S0165-4101(01)00019-2
Barton, J., Hansen, T. B., & Pownall, G. (2010). Which performance measures do investors around the world value the most-and why? Accounting Review, 85(3), 753–789. doi: 10.2308/accr.2010.85.3.753
Chiorean, R., Kirschenheiter, M., & Ramakrishnan, R. (2017). Earnings Management Through OCI Components. doi: 10.3386/w19846
Christensen, H. B., & Nikolaev, V. V. (2013). Does fair value accounting for non-financial assets pass the market test ?. Review Accounting Studies, 18, 734–775. doi: 10.1007/s11142-013-9232-0
Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling theory: A review and assessment. Journal of Management, 37(1), 39–67. doi: 10.1177/0149206310388419
Hann, R. N., Heflin, F., & Subramanayam, K. R. (2007). Fair-value pension accounting. Journal of Accounting and Economics, 44, 328–358. doi: 10.1016/j.jacceco.2007.04.001
Henny. (2016). Pengaruh faktor akuntansi terhadap prediksi peringkat obligasi. Jurnal Akuntansi, XX(01), 52–69.
Holthausen, R. W., & Watts, R. L. (2001). The relevance of the value-relevance literature for financial accounting standard setting. Journal of Accounting and Economics, 31, 3–75.
Ikatan Akuntan Indonesia. (2009). Pernyataan standar akuntansi keuangan. Jakarta: Salemba Empat.
Jones, D. A., & Smith, K. J. (2011). Comparing the value relevance, predictive value, and persistence of other comprehensive income and special items. The Accounting Review, 86(6), 2047–2073. doi: 10.2308/accr-10133
Jorion, P., Shi, Æ. C., & Zhang, Æ. S. (2009). Tightening credit standards : the role of accounting quality. Review Accounting Studies, 14, 123–160. doi: 10.1007/s11142-007-9054-z
Kosi, U. (2010). Credit relevance of accounting information and mandatory IFRS adoption. Paper was Presented at An Enterprise Odyssey International Conference Proceeding, University of Zagreb (pp. 662–683).
Lestari, K. Y., & Yasa, G. W. (2014). Pengaruh penerapan corporate governance dan profitabilitas terhadap peringkat obligasi. E-Jurnal Akuntansi Universitas Udayana, 8(1), 227–249.
Magreta, & Nurmayanti, P. (2009). Faktor-faktor yang mempengaruhi prediksi peringkat obligasi ditinjau dari faktor akuntansi dan non akuntansi. Jurnal Bisnis dan Akuntansi, 11(3), 143–154.
Mahfudhoh, R. U., & Cahyonowati, N. (2014). Analisis faktor-faktor yang mempengaruhi peringkat obligasi. Diponegoro Journal of Accounting, 1(1), 1–13. Retrieved from http://ejournal-s1.undip.ac.id/index.php/accounting
Morris, R. D. (1987). Signalling, Agency Theory and Accounting Policy Choice. Accounting and Business Research. doi: 10.1080/00014788.1987.9729347
Penman, S. H. (2007). Financial reporting quality: is fair value a plus or a minus?. Accounting and business research, 37(sup1), 33-44. doi: 10.1080/00014788.2007.9730083
Rusfika, & Wahidahwati. (2015). Kemampuan faktor akuntansi dan non akuntansi dalam memprediksi bond rating. Jurnal Ilmu & Riset Akuntansi, 4(4), 1–18.
Spence, M. (1973). Job market signaling. Quarterly Journal of Economics, 355–374.
Watts, R. (2003). Conservatism in accounting part ii: evidence and research opportunities. Accounting Horizons, 17(4), 287–301. doi: 10.2308/acch.2003.17.4.287
Zhang, Y., & Wiersema, M. F. (2009). Stock market reaction to ceo certification: The signaling role of CEO background. Strategic Management Journal, 30, 693–710. doi: 10.1002/smj
Ziebart, D. A., & Reiter, S. A. (1992). Bond ratings, bond yields and financial information. Contemporary Accounting Research, 9(1), 252–282. doi: 10.1016/S0165-4101(01)00019-2
Downloads
Published
How to Cite
Issue
Section
License
License
Journal of Accounting and Investment is licensed under Creative Commons Attribution Attribution-NonCommercial-NoDerivatives 4.0 International License.
