Our results empirically confirmed that the IFRS mandate had solely a short-lived effect, and no long- lasting impact, on the problem of asymmetric information in the IPO market. This study is the first of its kind in the emerging market context and has important implications for IPO investors and analysts, IFRS-IPO researchers, and policymakers in emerging economies. Conversely, in the secondary market, with negligible information asymmetry, the IFRS was not beneficial for the long-term performance of companies in the IPO market. When information asymmetry was high, such as in the primary market, the IFRS succeeded in alleviating the underpricing of IPO firms. It found that mandating the application of the IFRS had a significant short-lived but no long-lived effect on IPO firms’ information asymmetry. The study employed several Difference-in-Differences (DiD) models for a sample comprising 102 Saudi Arabian IPO firms for 2003–2017. This study examined the short- and long-lived effects of the International Financial Reporting Standards (IFRS) mandate on the quality of reporting information of Initial Public Offering (IPO) firms in emerging market economies. The findings suggest that urgent training is required for the effective implementation of IFRS in Saudi Arabia. The findings are innovative and will be helpful to local standard setters (SOCPA), international standard setters (IASB), and preparers and investors. To the best of our knowledge, this is the first study on differences between Saudi GAAP and IFRS, and the findings thus make a valuable contribution to accounting regulation literature. The study finds that there are major differences between Saudi GAAP and the 15 IFRS standards studied: IAS 1 Presentation of Financial Statements IAS 7 Statement of Cash Flows Zakat and IAS 12 Income Tax IAS 16 Property Plant and Equipment IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 17 Leases IAS 19 Employee Benefits IAS 21 The Effects of Changes in Foreign Exchange Rates IAS 24 Related Party Disclosures IAS 34 Interim Financial Reporting IAS 36 Impairment of Assets IAS 38 Intangible Assets IAS 40 Investment Property IAS 41 Agriculture and IFRS 9 Financial instruments.
Saudi Arabia is a member of G20 and the largest oil exporter in the world. The purpose of this study is to investigate the differences between IFRS and Saudi accounting standards (Saudi GAAP) issued by the Saudi Organization for Certified Public Accountants (SOCPA). Despite a substantial move toward convergence between principles-based International Financial Reporting Standards (IFRS) globally, there has been little research examining the differences between national standards and IFRS.
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