THE EFFECT OF IFRS ADOPTION ON CORPORATE REPORTING QUALITY IN SAUDI ARABIA: EVIDENCE FROM COMPARABILITY, DISCLOSURE AND TIMELINESS

Abstract

This study empirically investigates the effects of financial accounting reforms, i.e. the adoption of International Financial Reporting Standards (IFRS) on the quality, and comparability of corporate financial reporting in Saudi Arabia. The research, based on panel data on 150 listed firms covering the years 2014-2023, examines variations in reporting accuracy, transparency and reporting disclosure in the current period before and after the implementation of IFRS. The quality of financial reporting is assessed by accrual-based earnings management measures, disclosure indices, and timeliness indexes. A Difference-in-Differences (DiD) regression framework is used to estimate causal effects of IFRS adoption on firm level reporting behaviour. The empirical results show that the quality and comparability of disclosure is significantly increased by IFRS adoption, and the increase is more pronounced among large-cap and economically sophisticated firms. On the other hand, smaller entities show slower convergence because of institutional and capacity limitations. Overall, the adoption of IFRS seems to play a key role in improving investor confidence, reducing information asymmetry and bringing Saudi Arabia's financial reporting environment closer to standards. The study is a contribution to the literature on international accounting harmonisation by offering new evidence from a fast-temped emerging economy. The recommendations highlight the importance of ongoing professional training, regularity and strength of regulatory oversight, and digitalization of financial reporting to ensure the long-term success of IFRS implementation.