Margani Pinasti(1*)

(1) Universitas Jenderal Soedirman Purwokerto
(*) Corresponding Author


This research examines factors that explain the variation of value-relevance of accounting information for stock market in Indonesia. A hypothesis namely alternative information hypothesis was proposed in the study. In the alternative information hypothesis, researcher argues that value-relevance of accounting information is getting decreasing from time to time because of the response change of the users on accounting information, as the result of alternative information that is available and used in the company valuation nowadays. To examine the alternative information hypothesis, examining the value-relevance variation of accounting information between the time and between the factors of company characteristic is done. Industry factors, negative earnings, one-time items are examined, to find out whether those factors are able to explain the variation of the value-relevance of accounting information. The period of study samples are from 1990 to 2001. The analysis uses five models of company valuation and two kinds of value-relevance measures, those are R2 and abnormal pricing errors. The results of this study proved that there is decreasing of value-relevance of accounting information from time to time. Industry variable and transitory earnings variables (negative earnings characteristic and one-time items proportion) can not explain the variation of value-relevance of accounting information. Overall, this research can draw conclusion that for stock market in Indonesia, there has been decreasing of value-relevance of accounting information from time to time. It can not be attributed to the industry variable, negative earnings characteristic, or one-time items proportion. So that, the decreasing is explained by the lower value-relevance of accounting information from time to time, which reflects the users response on accounting information. This study results support the alternative information hypothesis.


value-relevance of accounting information, alternative information hypothesis

Full Text:



Amir, E. dan B. Lev. 1996. “Value-relevance of Nonfinancial Information,” Journal of Accounting and Economics 22: 3-30. Beaver, S. 1968. “The Value-relevance of Annual Earnings Announcements,” Journal of Accounting Research, Supplement: 68-76. Brown, S., K. Lo dan T. Lys. 1999. “Use of R2 in Accounting Research: MeasuringChanges in Value Relevance Over The Last Four Decades,” Journal of Accounting and Economics 28: 83-115. Collins, D., E. Maydew dan I. Weiss. 1997. “Changes in the Value-relevance of Earnings and Book Values over the Past Forty Years,” Journal of Accounting and Economics 24: 39-67. Ely K. dan G. Waymire. 1999. “Accounting Standard-setting Organizations and Earnings Relevance: Longitudinal Evidence from NYSE Common Stocks,” Journal of Accounting Research, Autumn: 293-317. Francis, J. dan K. Schipper. 1999. “Have Financial Statements Lost Their Relevance?,” Journal of Accounting Research, Autumn: 319-352. Gu, Z. 2002. “Cross-sample Incomparability of R2s and Additional Evidence on Value Relevance Changes Over Time,” Working Paper. Graduate School of Industrial Administration. Gujarati, D.N. 1995. Basic Econometrics. 3rd ed. McGraw-Hill Inc. Lev, B. dan P. Zarowin. 1999. “The Boundaries of Financial Reporting and How to Extend Them,” Journal of Accounting Research, Autumn: 353-385. Ohlson, J. 1995. “Earnings, Book Values, and Dividends in Security Valuation,” Contemporary Accounting Research, Spring: 661-688. O’Neil, W.J. 2002. How to Make Money in Stocks: A Winning System in Good Times or Bad. 3rd ed. McGraw-Hill Inc. Ota, K. 2001. “The Impact of Valuation Models on Value-Relevance Studies in Accounting: A Review of Theory and Evidence,” Working Paper. The Australian National University. Rimerman, T. 1990. “The Changing Significance of Financial Statements,” Journal of Accountancy, April: 79-83.

Article Metrics

Abstract views : 1462 | views : 3094


  • There are currently no refbacks.

Copyright (c) 2006 Journal of Indonesian Economy and Business

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Journal of Indonesian Economy and Business


Editorial Team
Focus and Scope
Peer Review Process
Publication Ethics
Screening for Plagiarism


Author Guidelines
Submission Guidelines
Online Submissions
Copyright Notice
Privacy Statement
Author Fees


Author Pack
Submission Form & Manuscript Template



Reviewer Guidelines
Reviewer Acknowledgement



General Search
Author index
Title index



The Journal of Indonesian Economy and Business (print ISSN 2085-8272; online ISSN 2338-5847) is published by the Faculty of Economics and Business Universitas Gadjah Mada, Indonesia. The content of this website is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License

© 2019 Journal of Indonesian Economy and Business 
 Visitor Statistics