Corporate governance, compliance level of IFRS disclosure and value relevance of accounting information – Indonesian evidence

Abstract

This paper discusses the results of empirical research that investigates the effect of corporate governance (CG) and the level of compliance with mandatory disclosure of the International Financial Reporting Standards (IFRS) on the quality of accounting information produced by Indonesian companies. The research covers five years after full implementation of IFRS, namely from 2013 to 2017. The quality of information is proxy by using value relevance of accounting information which is measured by the Ohlson Price Model. The level of compliance of the IFRS disclosures is measured using the disclosure index (DIND) and CG is proxy by board independence (BIND), board size (BSIZE), audit committee independence (ACIND), audit committee size (ACSIZE), and management ownership (MAN). This study find that DIND and BSIZE have a positive effect on the value relevance of accounting information, both EPS and BVS, while BIND, ACIND, and MAN negatively affect the value relevance of EPS but have a positive effect on the value relevance of BVS. ACSIZE has a positive effect on the value relevance of EPS but also a negative effect on the value relevance of BVS. These results further justify the inconsistency of the results of previous studies that link IFRS adoption and the quality of accounting information by including compliance level variables to test the quality (relevant value) of accounting information produced by Indonesian companies.