DOES INTERNATIONAL FINANCIAL REPORTING MATTER FOR FINANCIAL REPORTING QUALITY OF LISTED TEXTILE COMPANIES IN SAUDI ARABIA: MODERATING ROLE OF CORPORATE GOVERNANCE

Abstract

The objective of this study was to examine the moderating influence of corporate governance structures on the relationship between the adoption of International Financial Reporting Standards (IFRS) and the quality of financial reporting among manufacturing textile firms in Saudi Arabia. Quantitative data were gathered from the annual reports of textile companies spanning from 2014 to 2023, and subsequently analysed through panel data utilizing pooled, random, and fixed effect models. Regression analysis revealed a significant negative impact of IFRS adoption on financial reporting quality. Furthermore, the moderation analysis indicated that various corporate governance indicators such as board size, board committees, board composition, board independence, and board diversity significantly influenced the relationship between IFRS adoption and financial reporting quality. These findings provide valuable insights into the interplay between regulatory changes and internal control mechanisms, thereby shaping financial reporting practices. Additionally, the results offer implications for policymakers and regulators in Saudi Arabia regarding theefficacy of existing governance frameworks in ensuring the integrity and transparency of financial reporting within the textile industry. Moreover, this study presents avenues for further research, encouraging scholars to extend the current model and explore new research areas.