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<p>This study explores the impact of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) implementation on the quality of financial reporting among Saudi Arabian SMEs and how institutional pressures, economic factors and firm characteristics combine to influence the outcome of adoption. Quantitative data was gathered using a mixed-method design and 312 SME operators, finance managers, and accountants were surveyed using structured questionnaires, with semi-structured interviews with 25 key informants. The relationships between perception, perceived advantages, implementation obstacles and reporting quality expectations were tested using structural equation modelling (SEM). The findings reveal that favourable perceptions of IFRS for SMEs strongly predict anticipated reporting quality improvements (β = 0.490, <i>p</i> &lt; 0.01), while a significant positive relationship exists between perceived advantages and implementation obstacles (β = 0.426, <i>p</i> &lt; 0.05), indicating an engagement-awareness trade-off. Firm maturity (years in operation) positively influences perception (β = 0.344, <i>p</i> &lt; 0.05), whereas nominal exposure measures such as accounting services provision and self-reported information level show negligible direct effects. The study concludes that without addressing institutional and resource constraints, IFRS adoption remains symbolic rather than substantive for Saudi SME reporting quality. The paper recommends capacity-building programmes that strengthen absorptive capacity, streamline disclosure requirements, incorporation of IFRS compliance into credit-rating systems of financial institutions, and sector-targeted training of Monshaat and SOCPA. This study adds to the institutional theory by illustrating the interplay between coercive, normative and mimetic pressures and firm level capacity in the determination of reporting quality outcomes, which presents one of the first empirical evaluations of the adoption of IFRS among SMEs in Saudi Arabia.</p>

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The effect of IFRS implementation on the reporting quality of SMEs in Saudi Arabia

  • 期刊论文

  • 发表日期：

    2026年6月29日

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  • Ahmed Alribi

摘要

This study explores the impact of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) implementation on the quality of financial reporting among Saudi Arabian SMEs and how institutional pressures, economic factors and firm characteristics combine to influence the outcome of adoption. Quantitative data was gathered using a mixed-method design and 312 SME operators, finance managers, and accountants were surveyed using structured questionnaires, with semi-structured interviews with 25 key informants. The relationships between perception, perceived advantages, implementation obstacles and reporting quality expectations were tested using structural equation modelling (SEM). The findings reveal that favourable perceptions of IFRS for SMEs strongly predict anticipated reporting quality improvements (β = 0.490, p < 0.01), while a significant positive relationship exists between perceived advantages and implementation obstacles (β = 0.426, p < 0.05), indicating an engagement-awareness trade-off. Firm maturity (years in operation) positively influences perception (β = 0.344, p < 0.05), whereas nominal exposure measures such as accounting services provision and self-reported information level show negligible direct effects. The study concludes that without addressing institutional and resource constraints, IFRS adoption remains symbolic rather than substantive for Saudi SME reporting quality. The paper recommends capacity-building programmes that strengthen absorptive capacity, streamline disclosure requirements, incorporation of IFRS compliance into credit-rating systems of financial institutions, and sector-targeted training of Monshaat and SOCPA. This study adds to the institutional theory by illustrating the interplay between coercive, normative and mimetic pressures and firm level capacity in the determination of reporting quality outcomes, which presents one of the first empirical evaluations of the adoption of IFRS among SMEs in Saudi Arabia.