The Relevance of Financial Statements in the Industrial Revolution 4.0 Era

Abstract

The emergence of Industrial Revolution 4.0 has a significant impact on the business processes. It is also expected to change the characteristics of the needed accounting information. The close ties between accounting and the Industrial Revolution 4.0 encourages researchers to conduct research regarding the correlation between the two fields. The research aimed to discuss the characteristics of companies in the Industrial Revolution 4.0 era and identify whether a mismatch occurred between the information in the financial statements and the changes in the characteristics of companies in the Industrial Revolution 4.0 era. It was a narrative literature review using secondary data from various sources. Data collection was made through library research. Then, the data were analyzed using content analysis. The results show that more and more digital-based companies emerge and develop with a remarkably high company value even without having any underlying asset. On the other hand, several studies indicate that assets as an element of financial statements are necessary for determining the company value for allocating economic resources effectively. However, some studies explain that companies with high assets have a high company value. It shows a gap that makes the relevance of financial statements in determining the company value in the Industrial Revolution 4.0 era questionable. This matter has implications for stakeholders to use financial statements for decision-making in Industrial Revolution 4.0 era and future research.