IFRS Innovation, Disclosure Quality and Firm-Specific Characteristics: A New Moderating Assessments across GCC region

Abstract

GCC countries have undergone several reforms in governance and their standards of internal controls are changing rapidly. This has been attributed to the importance of providing guidelines, practices, and regulations for listed companies; therefore, it is important to analyse the level of adoption of the International Financial Reporting Standards (IFRS) and assess its effects on the association between disclosure quality and firm-specific characteristics of the financial companies listed on the Saudi Stock Exchange (Tadawul) and other exchanges of Gulf Cooperation Council (GCC) countries. The purpose of this thesis is to investigate the moderating role of IFRS adoption, experience, Innovation among the association of disclosure quality, firm performance, and firm-specific characteristics across GCC region. A total of 3500 observations covering the firm-level in Saudi Arabia and other GCC countries from 2016 to 2020 were obtained from secondary sources. The quantitative techniques of unbalanced panel data regression models, second lagged estimates and other econometric techniques were applied to test our hypothesis. This research confirms that IFRS adoption plays a critical role in the quality of firms’ financial reports and creates favourable economic conditions in Saudi Arabia and other GCC countries. Policy-wise, this research observe that enforcement plays a critical role in the process of ensuring that the IFRS adoption positively fosters the financial reporting system to lead to a higher firms’ investment efficiency. This thesis is also a collection of four induvial papers but related investigation on IFRS adoption. The first empirical paper (chapter 4) assesses whether IFRS adoption has any moderator role in the relation between disclosure quality and firm-specific characteristics in the Saudi stock market. Generally, this research adopts agency theory to obtain insights from the factors and obstacles that influence disclosure determinants quality. While the second empirical paper (chapter 5) investigate the moderating impact of IFRS innovation on the relation between governance practices and firm performance across GCC region. The third empirical paper (chapter six) and the fourth empirical paper (chapter seven) examine the relation between firm-level investment and capital structure across GCC region considering the moderating role of IFRS adoption.