Proceedings of the Asia Pacific Business and Economics Conference (APBEC 2018)

Value Relevance Using Accounting Information and Market Reaction to Tax Amnesty in Indonesia

Authors
Annisa Febriana, Fatia Rahmadini, Elvia R. Shauki, Vera Diyanty
Corresponding Author
Vera Diyanty
Available Online July 2019.
DOI
10.2991/apbec-18.2019.34How to use a DOI?
Keywords
tax amnesty; value relevance; signaling; accounting information.
Abstract

On July 2016, the Indonesian Government issued Law No. 11 2016 on Tax Amnesty. Under this regulation, all taxpayers, both individual and corporate taxpayers, have an opportunity to disclose assets and liabilities that were unreported in previous tax periods and pay a redemption fee. Subsequently, the Indonesian Board of Accounting Standards issued Pernyataan Standar Akuntansi Keuangan (PSAK) 70 to specify the accounting treatment of tax amnesty assets and liabilities. Prior research on the value relevance of tax account and disclosure is still limited, especially regarding tax amnesty information. This study aims to examine the value relevance of tax amnesty as accounting information. We use an empirical method with a sample of 142 firms that participate in the tax amnesty program in Indonesia. We find that tax amnesty information on a firm’s financial statement has no significant correlation with cumulative abnormal earnings; however, tax amnesty information indirectly has a significant negative effect on unexpected earnings. The findings confirm that tax amnesty information has a negative signal to the market and suggests that investors perceive the right financial information presented. Our results provide insights into management on accounting policy choice regarding tax amnesty. Besides, the results provide information to standard setters about the impact of a new accounting standard related to tax amnesty.

Copyright
© 2019, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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Volume Title
Proceedings of the Asia Pacific Business and Economics Conference (APBEC 2018)
Series
Advances in Economics, Business and Management Research
Publication Date
July 2019
ISBN
978-94-6252-766-9
ISSN
2352-5428
DOI
10.2991/apbec-18.2019.34How to use a DOI?
Copyright
© 2019, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Cite this article

TY  - CONF
AU  - Annisa Febriana
AU  - Fatia Rahmadini
AU  - Elvia R. Shauki
AU  - Vera Diyanty
PY  - 2019/07
DA  - 2019/07
TI  - Value Relevance Using Accounting Information and Market Reaction to Tax Amnesty in Indonesia
BT  - Proceedings of the Asia Pacific Business and Economics Conference (APBEC 2018)
PB  - Atlantis Press
SP  - 260
EP  - 266
SN  - 2352-5428
UR  - https://doi.org/10.2991/apbec-18.2019.34
DO  - 10.2991/apbec-18.2019.34
ID  - Febriana2019/07
ER  -