{"title":"IFRS Adoption, Corporate Governance, and Information Quality: Evidence From KSA","authors":"Fatma Zehri, Norah Alrumayyan, Noha Alzeaagi","doi":"10.51325/ijbeg.v6i1.109","DOIUrl":null,"url":null,"abstract":"This research aims to predict the effectiveness of implementing International Financial Reporting Standards (IFRS) in reducing earnings management in Saudi Arabia (KSA). Considering that earnings management is influenced by various factors, we also propose examining the impact of corporate governance strength on enhancing the reliability of accounting information. Empirical results are obtained from a sample of 51 Saudi listed firms observed from 2014 to 2020. Discretionary accruals (DA) are utilized to identify earnings management, estimated using Dechow et al.'s (1995) model. Subsequently, a multivariate regression analysis is conducted to explore the relationship between DA, IFRS adoption, and corporate governance structure. The main findings indicate that the independence of both the boards of directors and the audit committee has a significant negative impact on earnings management in Saudi industrial companies. However, the size of the board, the size of the audit committee, and the frequency of audit committee meetings do not appear to have a significant effect on DA. Therefore, we suggest that certain mandatory measures should be implemented to enhance the effectiveness of corporate governance mechanisms in a developing economy like Saudi Arabia (KSA).","PeriodicalId":35452,"journal":{"name":"International Journal of Business Governance and Ethics","volume":null,"pages":null},"PeriodicalIF":0.0000,"publicationDate":"2023-07-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of Business Governance and Ethics","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.51325/ijbeg.v6i1.109","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"Business, Management and Accounting","Score":null,"Total":0}
引用次数: 0
Abstract
This research aims to predict the effectiveness of implementing International Financial Reporting Standards (IFRS) in reducing earnings management in Saudi Arabia (KSA). Considering that earnings management is influenced by various factors, we also propose examining the impact of corporate governance strength on enhancing the reliability of accounting information. Empirical results are obtained from a sample of 51 Saudi listed firms observed from 2014 to 2020. Discretionary accruals (DA) are utilized to identify earnings management, estimated using Dechow et al.'s (1995) model. Subsequently, a multivariate regression analysis is conducted to explore the relationship between DA, IFRS adoption, and corporate governance structure. The main findings indicate that the independence of both the boards of directors and the audit committee has a significant negative impact on earnings management in Saudi industrial companies. However, the size of the board, the size of the audit committee, and the frequency of audit committee meetings do not appear to have a significant effect on DA. Therefore, we suggest that certain mandatory measures should be implemented to enhance the effectiveness of corporate governance mechanisms in a developing economy like Saudi Arabia (KSA).
期刊介绍:
Issues of governance, responsibility and accountability are becoming increasingly important as the world, simultaneously, becomes dominated by corporations, interconnected via forces of globalisation and transparent through heightened media attention and the rise in internet-led democracy. Companies, and in particular leaders of business, can no longer hide from their responsibilities to wider stakeholder community by claims of ignorance of corporate malpractices and of failure. Boards of directors are being increasingly made responsible for both the successes and failures of their companies, as well as their own conduct and behaviours. Actions of business have increasingly become a concern not just for shareholders but also for the wider community at large.