The impact of Applying International Financial Reporting Standards on the Quality of Financial Reports: An Empirical Study on Saudi Listed Firms

Document Type : Research article

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Department of Accounting, College of Business, King Khalid University, Abha 61421, Saudi Arabia

Abstract

This study aims to analyze the impact of the mandatory adoption of International Financial Reporting Standards (IFRS) on the quality of financial reporting for companies listed on the Saudi Stock Exchange, with a focus on measuring financial reporting quality through accruals (KOTH). The study utilized panel data models, including fixed and random effects models, to estimate the relationship between independent, adjusted, and control variables. The results revealed that the mandatory adoption of IFRS significantly enhances the quality of financial reporting by improving the accuracy of accruals. The study also highlighted the role of institutional frameworks, such as audit committees, in maximizing the benefits of mandatory adoption. Furthermore, it demonstrated variability in the impact of IFRS based on different company characteristics, emphasizing the importance of robust governance systems in achieving greater gains. Despite limitations related to the sample scope and timeframe, the study provides valuable insights into improving financial reporting quality in emerging markets. It recommends further research to analyze the impact of IFRS adoption in diverse economic and cultural environments, considering external economic factors and technological innovations.

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