Value Relevance of Accounting Information under IFRS 16 of Companies Listed on Indonesia Stock Exchange
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Abstract
The objectives of this research were to study the impact of IFRS 16 on the explanatory relevance of book value and earnings per share and to study the relevance of explaining the stock prices of right-of-use assets (ROU) and lease liabilities (LLA) of companies listed on the Indonesian Stock Exchange in the year that IFRS 16 comes into effect on January 1, 2020. This study examined and collected data from 819 listed companies. The quarter information from 2018–2021, totaling 16 quarters were collected. Descriptive statistics and inferential statistics were employed to analyze the data.
The research findings revealed that in the year that IFRS 16 was first implemented and put into practice, there was no impact on the relationship between the book value, earnings per share, and stock prices of companies listed on the Indonesia Stock Exchange. This was because, whether the company implemented IFRS 16 or not, investors normally use book value and earnings per share as information for making investment decisions. The relationship testing of items that are directly recognized in IFRS 16, ROU, and LLA found a negative relationship with the stock prices of companies listed on the Indonesian Stock Exchange. It was found that ROU and LLA provided additional evidence and illustrated value relevance for investors' investment decisions and related to the stock prices of companies listed on the Indonesia Stock Exchange. In addition, It also helped increase the value of accounting information for investment decisions and explain stock prices through the implementation of IFRS 16. This benefits financial statement users and reflects a fairer presentation of accounting information.
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