The Implementation of Fair Value in Reducing the Gap Between Book Value and Market Value for Industrial Sector Companies on the Indonesia Stock Exchange

Skolatiska Listyana Hendrik; Pujiono Pujiono

doi:10.38142/jogta.v5i2.2152

Authors

Skolatiska Listyana Hendrik Universitas Negeri Surabaya, Indonesia
Pujiono Pujiono Universitas Negeri Surabaya, Indonesia

DOI:

https://doi.org/10.38142/jogta.v5i2.2152

Keywords:

book value, market value, IFRS convergence, fair value, value relevance

Abstract

This study examines differences between book value per share (BVPS) and market value per share (MVPS) among Industrials firms listed on the Indonesia Stock Exchange during two stages of IFRS convergence. The study applies a quantitative comparative approach using secondary data from annual financial statements and year-end closing share prices. The observation period is divided into a transition period and a full-adoption period. Descriptive statistics and normality tests are conducted before hypothesis testing. Because the data are not normally distributed, the Mann–Whitney U test is used. The results show a statistically significant difference between BVPS and MVPS during the transition period. In contrast, no statistically significant difference is found during the full-adoption period. The findings indicate that the relationship between accounting-based book value and market-based valuation differs across the observed stages of IFRS convergence. The results should not be interpreted as evidence that IFRS alone caused the observed pattern because market value is also influenced by investor expectations, firm prospects, risk, and broader market conditions.

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