IFRS Adoption, Corporate Governance, and Information Quality: Evidence From KSA


Earnings Management
Discretionary Accruals
Corporate Governance

How to Cite

Zehri , F., Alrumayyan , N. . and Alzeaagi , N. . (2023) “IFRS Adoption, Corporate Governance, and Information Quality: Evidence From KSA”, International Journal of Business Ethics and Governance, 6(1), pp. 12-26. doi: 10.51325/ijbeg.v6i1.109.


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).



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