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Standar Akuntansi Keuangan (SAK). At the
beginning of 2012, as a commitment of G-20
member (Daske et al., 2008), Indonesia adopted
International Reporting Standard (IFRS). The IFRS
convergence in Malaysia into Malaysian Financial
Reporting Standard (MFRS) begun on January 1,
2012. In 2009, the Singapore Accounting Standards
Council (ASC) announced to conduct full
convergence with IFRS in 2012.
This study aims to analyze whether there are any
changes in financial reporting quality after
International Financial Reporting Standard adoption
in Indonesia, Malaysia and Singapore. We use
paired sample test to analyse the data. We found that
financial reporting quality is increased, for the
relevance, understandability and comparability
characteristic. As for representation faithfulness
characteristic quality, it was decreased after the
adoption.
2 LITERATURE REVIEW
Positive accounting theory (Watts and Zimmerman,
1986), says that policy and estimates for the
management interest, which was supported by the
study result by Healy and Wahlen (1999), and the
management has intention to apply certain
accounting Sweeney (1994). Therefore, we assume
that after the IFRS adoption, the company will have
more opportunity to apply the flexible accounting to
fulfil their interest.
However, study by Healy and Wahlen (1999),
Leuz and Verrechia (2000), Daske et al. (2008), and
Amstrong et al. (2008), found that the asymmetry
information after the IFRS adoption was decreasing,
due to the increasing of the financial statement
quality. Karampinis and Hevas (2011), Alali and
Foote (2012), study found that implementing the
IFRS will increase the information relevance on the
financial statement as it uses fair value
measurement, widely.
Iatridis and Rouvolis (2010), Lin and Paananen
(2007), Ewart and Wagenholf (2013) performed the
financial statement quality study by measuring the
earnings management, before and after IFRS
adoption. Ewart and Wagenholf (2013) found that
more rigid accounting standard could decrease the
earnings management and increase the financial
statement quality. Yacoob and Ahmad (2011) found
the timeliness in Malaysia was decreasing after IFRS
adoption, which meant more time needed to issue
the financial statement.
This research aims to evaluate whether there is
any increasing in financial reporting quality after the
IFRS adoption, in Indonesia, Singapore and
Malaysia, use the NiCE qualitative approach. NiCE
developed the comprehensive index of quality
measurement based on qualitative characteristic such
as relevance, faithful representation,
understandability, comparability, and timeliness.
3 RESEARCH METHOD
3.1 Empirical Design
The purpose of this research is to empirically
evaluating the financial reporting quality before and
after the IFRS adoption, in each country. We
perform mean comparation test using paired sample
test. We use this model in order to find the level of
significance of the financial reporting quality
changes before and after IFRS adoption. We use
SPSS program and Microsoft excel to run the data.
As we state earlier, researcher use the NiCE
qualitative approach in measuring the financial
reporting quality. NiCE developed the
comprehensive financial reporting quality
measurement in a form of index quality
measurement based on the IASB (2008) and FASB
(2008) each qualitative characteristic such as
relevance, faithful representation, understandability,
comparability, and timeliness. Here is the Nice
measurement that we use in evaluating the financial
reporting quality:
Table 1: NiCE quality measurement.
To what extent does the
presence of the
forwardlooking statement
help forming expectations
and predictions concerning
the future of the company
1=no forward looking
information; 2=forward looking
information not an apart
subsection; 3=apart subsection;
4=extensive predictions ;
5=Extensive predictions useful
for making expectations
To what extent does the
presence of non financial
information in terms of
business opportunities and
risks complement the
financial information
1=No non-financial
information; 2=little non-
financial information, no useful
for forming expectations;
3=useful non-financail
information; 4=useful non
financial information, helfpul
for developing expectations
To what extent does the
company use fair value
instead of historical cost
1=Only Historical cost (HC);
2=Most HC; 3=Balance Fair
value (FV)/HC; 4=Most FV;
5=Only FV
To what extent do the
reported results provide
feedback to the users of the
annual reports as to how
various market events and
1=No feedback; 2=Little
feedback on the past;
3=Feedback is present;
4=Feedback helps
understanding how events and
Qualitative Analysis of Financial Reporting Post Adoption of International Financial Reporting Standard - Comparative Study in South East
Asia
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