Value Relevance and Reliability of Intangible Assets Around the IFRS Adoption: Case of Indonesia

The aim of this study was to obtain empirical evidence on value relevance and reliability of intangible assets. The usefulness of financial reporting is determined by the trade-off between relevance and reliability. Intangible assets disclosure as one important information in financial reporting should also provide value relevance and value reliability. With the implementation of IFRS, the value relevance of IFRS should outperform its reliability. This study employed eight-year period divided into two consecutive observations with 2007-2010 as the period of pre-IFRS implementation, and 2011-2014 as the period of post-IFRS implementation. Using 935 firms-observations from listed companies in Indonesian Stock Exchange (IDX), data were performed with Ohlson price model and multiple regression analysis. The result of this research showed that intangible assets have value relevance, and surprisingly the value relevance did not increase in the post IFRS implementation. A trade-off between reliability of intangible assets and its value relevance occurred in the pre IFRS adoption and subsequently the trade-offtend to decline in the period of post IFRS adoption.