In the agency theory, investors (principal) expect high company
performance, while managers (agent) want high incentives for their work. In
order to fulfill high company performance, manager can manipulate accounting
information. Accounting information that is often manipulated by manager is
earnings. Consequently, earnings reported in the financial reporting will loss
value relevance. Board of commissioner plays an important role as the investor’s
representative for constraining manipulation by manager. This study aims to
examine whether application IFRS to earnings management can reduce practice
earnings management and whether application IFRS to value relevance can
increase profit companies.
The population in this study are all publicly listed service companies on
the Indonesia Stock Exchange (IDX) 2009 - 2013. The number of samples are 89
companies from criteria observation. Regression analysis is used as a main
analysis tool.
The result of this study doesn’t find evidence that Application IFRS for
earnings management. However, this study find the evidence that application
IFRS for value relevance can increase profit the companies
