The Impact of the Transition from PSAK 30 to PSAK 116 on Profitability Ratios: Evidence from Indonesian Infrastructure Companies

Abstract

This study examines the impact of the transition from PSAK 30 (the Indonesian lease accounting standard equivalent to IAS 17) to PSAK 116 (equivalent to IFRS 16) on the profitability ratios of infrastructure companies listed on the Indonesia Stock Exchange (IDX). Effective from 1 January 2020, PSAK 116 eliminates the distinction between operating and finance leases for lessees, requiring virtually all leases to be recognised on the balance sheet as right-of-use assets and lease liabilities. This structural change directly alters the composition of total assets, total liabilities, and reported earnings, thereby affecting key profitability indicators. Using a quantitative comparative design, this study analyses annual financial statements of 69 infrastructure companies over the period 2018-2021, encompassing two pre-adoption years (2018-2019) and two post-adoption years (2020-2021). Non-probability purposive sampling was applied. Because normality tests (Kolmogorov-Smirnov and Shapiro-Wilk) rejected the normality assumption for all variables (p < 0.05), the Wilcoxon Signed Rank Test was employed for hypothesis testing. Results show that PSAK 116 adoption significantly affected both Return on Assets (ROA; Z = -2.190, p = 0.029) and Return on Equity (ROE; Z = -2.936, p = 0.003), with profitability declining in the majority of sample firms. These findings carry important implications for investors, management, and standard-setters in interpreting post-adoption financial performance