Implementing IFRS in Saudi Arabia: evidence from publicly traded companies

Mohammad Nurunnabi (Department of Accounting, Prince Sultan University, Riyadh, Saudi Arabia, and St Antony’s College, University of Oxford, Oxford, UK)
Eva K. Jermakowicz (Department of Accounting, College of Business, Tennessee State University, Nashville, Tennessee, USA)
Han Donker (Department of Accounting, College of Business, Central Washington University, Ellensburg, Washington, USA)

International Journal of Accounting & Information Management

ISSN: 1834-7649

Publication date: 2 March 2020



The Saudi Organization for Certified Public Accountants (SOCPA) requires that International Financial Reporting Standards (IFRS), as endorsed in Saudi Arabia, be used by all listed and unlisted companies. This study aims to provide insight into IFRS implementation problems, based on a survey sent to Saudi Arabian companies listed on Tadawul, the Saudi stock market (i.e. financial hub in the Middle East).


The survey focused on the impact that IFRS conversion has had on companies, their accounting and their finance strategies. The benefits and challenges of the adoption of IFRS are analyzed, including matters pertaining to the level of understanding and experience with IFRS, perceptions about the quality of IFRS and the impact of adoption of IFRS on consolidated equity and net income.


The survey had a response rate of 72 per cent. The results indicate a majority of respondents support conversion to IFRS as it results in higher quality financial reporting; the most important expected benefits of adopting IFRS include greater reporting transparency and improved comparability with other businesses; other expected benefits include harmonization of internal and external reporting, and increased cross-border investment opportunities; the IFRS process is costly and ties up resources because of its complexity and training needed and companies expect increased volatility in reported financial results that will impact share option plans and/or other incentive plans tied to profits. However, the authors find strong support among preparers of the financial statements for IFRS, as evidenced by higher agreement among respondents to the survey on the benefits of adopting IFRS, rather than on the costs of its adoption. Furthermore, the analysis shows that the likelihood of Saudi Arabian firms that are in favor of adopting IFRS decreases if the audit firm is one of the Big 4. The reason for this negative relationship could be that the cost of transition toward IFRS will be high. Therefore, Saudi Arabian firms will not favor a transition toward IFRS when their audit firm belongs to the Big 4. Most difficult to implement IFRS, as listed by respondents, include those on financial instruments, revenue, leases and employee benefits.


The authors show how economic and environmental factors play a critical role in the IFRS implementation process. This study should be important to all countries worldwide that are in the process of adopting IFRS.



Nurunnabi, M., Jermakowicz, E.K. and Donker, H. (2020), "Implementing IFRS in Saudi Arabia: evidence from publicly traded companies", International Journal of Accounting & Information Management, Vol. 28 No. 2, pp. 243-273.

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