Main Article Content
Purpose: The purpose of this study is to examine the effect of International Financial Reporting Standard (IFRS) implementation on the quality of financial reporting of commercial banks in Saudi Arabia. The quality of financial statements was measured using qualitative characteristics of accounting information i.e., relevance, faith representation, understandability, comparability and timeliness.
Approach/Methodology/Design: This study is cross-sectional and a questionnaire was used to collect data regarding the effect of implementing IFRS on five of the qualitative characteristics of the accounting information, including two of fundamental characteristics: relevance, faithful representation and three of the enhancing characteristics: understandability, comparability, and timeliness. The data was analyzed using descriptive statistics. The population of the study includes all the 12 commercial banks listed in the Saudi Stock Exchange.
Findings: The finding of the study reveals that the quality of financial reports which is measured through qualitative characteristics of accounting information (relevance, faith representation understandability, comparability and timeliness) was improved significantly after implementing IFRS compared with the period prior to the implementation of these standards.
Practical Implications: The study has implications for standards makers and users of the financial statements of banks in Saudi Arabia. Results of the study confirm the positive effect of implementing IFRS on the qualitative characteristics of accounting information, which is the basis for decision-making. These results are evidence in support of the transition plan to implement IFRS approved by Saudi Arabia
Originality/value: The benefits of implementing IFRS have undergone many studies in developed countries, especially Europe. Little is known about these benefits in developing countries. The study adds to this limited body of studies by examining the effect of implementing IFRS in Saudi Arabia as one of the developing countries.
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