A Study Disclosure of Accounting Policies and Accounting Standards by The Banking Companies of Saudi Arabia and Its Impact on The Users

Abstract

Purpose: This study seeks to analyse the economic implications of implementing accounting regulations and International Financial Reporting Standards (IFRS) in Saudi Arabian commercial banks. The study explicitly investigates the effect of the compulsory implementation of accounting policies and standards on accounting-based performance metrics. Originality/value: While the effects of adopting accounting rules and standards have been extensively researched in rich nations, the examination of the impact of IFRS adoption in underdeveloped countries remains restricted. This study enhances the literature by analysing the economic implications of implementing accounting laws and standards in the commercial banks of Saudi Arabia, a developed nation. Findings: The findings indicate that accounting policies and standards have markedly enhanced transparency, especially within the commercial banking sector, by diminishing information asymmetry and strengthening corporate governance. Nevertheless, smaller enterprises and industries such as real estate and manufacturing encounter difficulties in achieving complete compliance with IFRS owing to limited resources and sector-specific intricacies. Implication: Management should ensure that the bank's accounting policies and practices comply with both local regulations, as well as those international best practices. As a result, it is easier for users, especially international investors and analysts, to compare the financial performance and risk profile of the bank with those of other banks in other jurisdictions, therefore enhancing the bank’s appeal to foreign capital.