Market Reaction to the Adoption of International Financial Reporting Standard in Indonesia
Keywords:market reaction, IFRS, abnormal return
The aim of the study is to analyze the market’s reaction on the adoption of International Financial Reporting Standard (IFRS) in Indonesia. Investor reaction will be perceived by the existence of abnormal return as well as the difference of trading volume. The analysis tool used is One-sample test to assess the existence of abnormal return and Paired Sample T-test to observe the difference trading volume 3 days before and after the announcement of financial report. The sample was constituted by 31 Indonesian companies randomly selected listed on LQ45 and have been impacted by the adoption of IFRS since 2011. The result shows that there is no abnormal return 3 days before and after the announcement of financial report. However, there is abnormal return on the day of announcement. Trading volume shows there is no market reaction to the IFRS adoption 3 days before and after the announcement.
Armstrong, S., Barth, E., Jagolinzer, A. and Riedl, E. (2009). Market reaction to the adoption of I.F.R.S in Europe. Working Paper Series, Accounting Review forthcoming.
Botosan, C. (2006). Disclosure and the cost of capital: What do we know. Account. Bus. Res, 36, 31–
Karamanou, I. & Nischiotis, G. (2005). The valuation effects of firms voluntary adoption of international accounting standards. Working Paper. University of Cyprus.
Klimczak, K. M. (2011). Market reaction to mandatory IFRS adoption: Evidence from Poland. Accounting and Management Information Systems, 10(2), 228–248.
Latridis, G. (2010). International Financial Reporting Standards and the quality of Financial statement
information. International Review of Financial Analysis, 19, 193–204
Vazakidis, A. & Athianos, S. (2010). Measuring Investors’ Reaction to the Adoption of International Financial Reporting Standards in Greece, Using a Market-Based Model. American Journal of Economics and Business Administration, 2(1), 103–112.
Authors who publish with this journal agree to the following terms:
a. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License - Share Alike that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
b. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
c. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
All articles published Open Access will be immediately and permanently free for everyone to read and download. We are continuously working with our author communities to select the best choice of license options, currently being defined for this journal as follows: Creative Commons Attribution-Share Alike (CC BY-SA)